Riyadh, May 11 (IANS): Saudi Arabia will triple its value added tax (VAT) as part of austerity measures to support its coronavirus-hit economy, state-media reported on Monday.

The VAT will increase from 5 per cent to 15 per cent as of July 1, while the cost of living allowance will be suspended from June 1, the BBC quoted Saudi Arabia's state news agency as saying in its report.

"These measures are painful but necessary to maintain financial and economic stability over medium to long term... and overcome the unprecedented coronavirus crisis with the least damage possible," Finance Minister Mohammed al-Jadaan was quoted as saying.

The Kingdom had first introduced VAT two years ago as part of efforts to cut its reliance on world crude oil markets.

Monday's development comes after state spending outstripped income, pushing the Kingdom into a $9 billion budget deficit in the first three months of the year, the BBC reported.

That's as oil revenues in the period fell by almost a quarter from a year earlier to $34 billion, pulling down total revenues by 22 per cent.

At the same time Saudi Arabia's central bank saw its foreign reserves fall in March at their fastest rate in at least two decades and to their lowest level since 2011.

The measures to fight the impact of the pandemic are expected to slow the pace and scale of economic reforms launched by Crown Price Mohammed bin Salman.