Saudi Arabia will cut ministers' salaries by 20% and scale back financial perks for public sector employees, according to a cabinet statement and royal decree broadcast on state-run Ekhbariya TV on Monday.
It was the first announcement of pay cuts for government employees, who make up about two-thirds of working Saudis.
"The cabinet has decided to stop and cancel some bonuses and financial benefits," read a line of text on Ekhbariya, as a minister read to assembled ministers and royals, including King Salman, a list of cuts in various grades in the civil service.
The decision comes as low oil prices have pushed energy-rich Gulf Arab states to rein in lavish public spending. The kingdom racked up a record budget deficit of $100bn last year, forcing it to find new savings and ways to raise money.
A royal decree read directly after the broadcast on the TV channel announced the cut in ministers' pay. Housing and car allowances for members of the appointed Shoura Council will be cut by 15%.
Overtime bonuses were curbed at between a quarter and half of basic salaries, while annual leave may now no longer exceed 30 days.
An exception to the curbs would be made for troops involved in combat operations along the southern border and abroad as part of an 18-month military intervention led by the kingdom in neighbouring Yemen.
Saudi Arabia unveiled an economic reform plan this year to wean the kingdom off its addiction to oil, on which it depends for the overwhelming share of government revenue.
The so-called "Vision 2030" initiative aims to jumpstart the private sector, provide jobs for a growing population and collect more non-oil revenue.