Saudi Minister of Finance Mohammed al-Jadaan may have provided the most cogent and direct message to citizens about their economic future. It's going to be different, and it may require some painful adjustments. The same could have been said by just about any Group of 20 finance minister on the outlook for a post-COVID-19 recovery. But for Saudi Arabia, the reckoning was bound to come sooner or later; the coronavirus pandemic has hurried the future along.

Oil revenue dependency and massive public spending on salaries and social benefits have limits. The system is overloaded. Jadaan said, "The Saudi economy still depends greatly on public spending and therefore we have to maintain public finance so we can continue to support the economy for the years to come. Public finance needs to be regulated more. … We will reduce expenditure, God willing, even if some of the steps taken will be painful; they are for the benefit of everyone, for the benefit of the country and for the benefit of its citizens."

What then does a drastic reduction in public spending look like in Saudi Arabia? There are easy ways to trim the fat of the Saudi budget, starting with the megaprojects such as the Neom planned megacity and moving on down through the ministries to become more efficient. Defense spending is one other easy place to find cost savings, and the resolution of the war in Yemen would go a long way to reduce costs. Much more difficult will be reducing the public sector wage bill. In order to provide a form of COVID-19 relief and economic stimulus, there has been some backtracking on efforts to implement visa fees and reduce subsidies for electricity and water, with the government granting 30% utility tariff reductions to industries and suspending some visa fees paid by small and medium-sized companies (with fewer than nine employees) for three years, and reducing the expatriate visa fee for industrial companies by 25%. Combining stimulus actions to support business survival in the private sector, salary support to keep up domestic consumption and at the same time finding savings across government spending commitments will be like filling a bucket with a hole at the bottom.

The question of what to cut is easier to answer than why hasn't this been done before. There is nothing unusual about running a fiscal deficit or accessing international debt capital markets to help bridge a difficult period. Saudi Arabia will not be alone in doing either. What makes this crisis so jarring for the kingdom is that there is little reason to expect future revenue to ever recover to the recent past, in particular the special period or "magic decade" of 2003-2014 when oil revenues surged. Those days are over, but the model for government revenue has not adjusted, and neither have spending patterns. The structural causes of the current deficit are the same as they were when oil prices declined in late 2014. The twin crises of COVID-19 and the oil price collapse have simply made the inevitable occur sooner.