Kuwait Cabinet approves budget with huge shortfall
Kuwait City, Kuwait - Kuwait on Monday approved its budget for the 2018-2019 fiscal year, projecting a huge deficit for the fourth year in a row because of low oil prices.
Next year’s deficit is estimated at US$16.7bn, or 13.5 per cent of the OPEC member’s gross domestic product.
Finance Minister Nayef al Hajraf told a press conference, the government will withdraw from the state reserve fund and borrow on the domestic and international debt markets to finance the shortfall.
After posting healthy surpluses for 16 successive years, Kuwait has posted a budget deficit in each of the past three years after oil prices began to slide in mid-2014.
Hajraf said the new budget projects revenues at US$50bn, up 12 per cent on last year’s esti- mates after the oil price rose from US$45 to US$50 a barrel.
Oil income is estimated at US$44.3bn on a daily production of 2.8mn barrels.
Spending is projected at US$66.7bn, marginally higher than last year, the minister said.
He said government wages and subsidies account for 73 per cent of the budget which takes effect on April 1.
It still has to be passed by parliament.
Just 18 per cent of spending will go on development projects, Hajraf said.
He said Kuwait will not impose value-added tax (VAT) or other taxation without parliamentary approval.
But Hajraf said the government may raise charges on public services to boost non-oil revenues.
Kuwait’s Finance Minister, Nayef al Hajraf speaks during a conference to announce the budget for the 2018/2019 fiscal year in Kuwait City on Monday