The International Monetary Fund says Saudi Arabia should adjust its spending to help offset the effects of lower oil prices by reviewing its public sector wage bill and reducing energy subsidies.

Salaries, wages and allowances contribute to about 50 percent of total budgeted expenditures in Saudi Arabia. Direct and indirect energy subsidies are estimated to cost at least 115 billion Saudi riyals ($30.7 billion) annually.

The price of oil — the backbone of Saudi Arabia's economy — has fallen by about half since mid-2014. Around 90 percent of the Saudi government's revenue comes from oil.

The IMF said in a report Wednesday that it projects growth in Saudi Arabia's economy will slow to 2.8 percent this year and will dip to 2.4 percent next year as the government adjusts its spending.