- Finance ministry plans 1.6 percent reduction to $62 billion
- Budget is based on oil at $25 a barrel: deputy prime minister
Kuwait plans to cut spending by 1.6 percent in the fiscal year beginning in April, joining other Gulf states trying to deal with falling oil prices.
Government spending will be 18.9 billion dinars ($62 billion) and the deficit will be 12.2 billion dinars, Deputy Prime Minister Anas Saleh said in a statement on Thursday. The budget must be ratified by parliament.
Oil revenue fell 46 percent in the April-to-December period last year, according to data compiled by Bloomberg, and officials have urged parliament to cooperate with the government to pass laws to reduce the budget deficit. Kuwait should also consider introducing income, corporate and sales taxes, Salehsaid earlier this month.
HSBC Plc revised its projections for Kuwait’s 2016 economic growth to 1.9 percent from 2.1 percent, compared with a median estimate of 1.5 percent in a Bloomberg survey of economists.
Subsidies, public salaries and compensation make up 70 percent of total state spending at 13.3 billion dinars, the Finance Ministry said. The government is basing its projections on an oil prices of $25 per barrel, Saleh said this week.
The government aims to rationalize subsidies without hurting people on low incomes, the Finance Ministry said on its Twitter account on Wednesday. Citizens’ compensation “will not be affected to fix the budget deficit.”
The Kuwaiti Stock Exchange Index has fallen 25 percent over the past 12 months. It gained 0.8 percent as of 1:39 p.m. in Kuwait.