"Real GDP growth is expected to slow to 1.2 percent in 2016, but recover to 2 percent in 2017 as the pace of fiscal consolidation eases and to settle around 2.25 — 2.5 percent over the medium-term," the release stated.
The IMF noted that Saudi inflation has grown to more than 4 percent because of an increase in energy and water prices.
"Based on current policies, the fiscal deficit is projected to narrow to 13 percent of GDP in 2016," the IMF added.
Global oil prices plunged from $115 to less than $30 per barrel between June 2014 and January 2016, hitting their lowest levels since 2003 amid the ongoing glut in global oil supply, and causing significant problems for energy companies and oil-producing countries.
In 2016, the Saudi government has introduced a series of reforms to shift the country's economy in response to low oil prices.