DUBAI (Reuters) -Saudi Arabian state-owned oil giant Aramco expects to pay $31 billion in dividends to the Saudi government and its shareholders despite reporting lower earnings for the first quarter on Tuesday, hit by lower oil prices and volumes sold.

The Saudi government, which directly holds about 82.2% of Aramco, relies heavily on the company's payouts, which also include royalties and taxes.

The kingdom, the world's biggest oil exporter, is spending billions of dollars to diversify its economy away from fossil fuels.

Aramco reported a 14% decline in first-quarter net income to $27.3 billion in the three months to March 31, in line with analyst estimates and down from $31.9 billion a year earlier, according to a company earnings statement.

The company declared base dividend payouts for the first quarter totalling $20.3 billion and a performance-linked dividend distribution of $10.8 billion to be paid in the second quarter.

It said it expects total dividends of $124.3 billion to be declared in 2024.

OPEC+ has implemented a series of output cuts since late 2022 amid rising output from the United States and other non-member producers, and worries over demand as major economies grapple with high interest rates.

Brent crude has averaged around $83.50 so far in 2024, while Saudi Arabia needs oil at $96.2 to balance its 2024 budget, the IMF forecasts. With a projected budget deficit of 79 billion riyals ($21.07 billion) this year, the kingdom could delay parts of its multiple mega projects.

Finance Minister Mohammed Al Jadaan said recently that the kingdom's Vision 2030 plan to transform its economy will be adjusted as needed, with some projects being scaled back or extended and others accelerated amid a challenging environment.

The kingdom could also raise up to 138 billion riyals ($36.80 billion) in financing in 2024, from $23 billion initially estimated at the beginning of year.

Saudi Arabia is poised to sell more shares of energy giant Aramco, three people familiar with the matter told Reuters in February, and has lined up Citigroup, Goldman Sachs and HSBC for the sale, according to one of the sources.

($1 = 3.7502 riyals)

(Additional reporting by Rachna Uppal;Editing by Louise Heavens, David Goodman and David Evans)