DUBAI (BLOOMBERG) - Saudi Arabia moved to avert large-scale job layoffs during the coronavirus pandemic by pledging to help struggling companies with wages, in perhaps the kingdom's most significant measure so far to limit damage to the private sector.

Instead of terminating contracts of Saudi citizens, business owners can request monthly compensation amounting to 60 per cent of the employee's salary for the next three months, state-run Saudi Press Agency reported on Friday (April 3), citing a royal order.

The measure is set to take effect this month and around 1.2 million Saudis might qualify.

The government has vowed to stimulate the economy while making savings of 50 billion riyals (S$19.1 billion) from budgeted spending this year.

Coming in tandem, the crash in oil prices and the virus have wreaked havoc on public finances, and the kingdom could run a budget deficit of 23 per cent of gross domestic product if Brent crude falls to US$20, according to JPMorgan Chase estimates.

Amid the global carnage, Crown Prince Mohammed bin Salman's economic transformation plan - dubbed "Vision 2030" - could face deep budget cuts.