>

Kuwait accounted budget deficit for the first time in 16 years

Kuwait accounted budget deficit for the first time in 16 years due to the low oil prices and world economy delay. For fiscal year 2015/16, the budget deficit amounted to 4.6 billion USD, as the revenues shrank by 45% to 45.2 billion USD. The revenues from oil export, which generate 89% of all government revenue, dropped by 46.3% to 40.1 billion USD due to the low oil prices. Kuwait budget spending decreased by only 14.8%, despite of the cost savings, amounting to 60.5 billion USD.

Recently, the Finance Minister announced that Kuwait plans to use the debt markets and issue bonds to cover the deficit. The government will take credit of up to 10 billion USD from the international financial markets and up to 6.6 billion USD from the domestic financial markets, to fill the budget deficit gap.

In an attempt to hedge the risks for the economy, since 1998/99 the Kuwait established 600 billion USD investment fund, which makes investments in USA, Asia and Europe.

According to the Finance Minister, Kuwait will account a new budget deficit in 2016/17 amounting to 28.9 billion USD.

Last week, the government announced that will increase the price of petrol by almost 80%. The price of the best quality gasoline increased by 83% since September 1 and the cost of automotive fuel will reach 0.53 USD per liter. The cheapest Kuwaiti gasoline will rise by 41%. Furthermore, next year in Kuwait is expected to increase in prices of utilities, especially water and electricity, for foreign residents. All these actions are directed to treat the budget deficit and transform the economy from export-oriented to domestic-oriented.

more recommended stories