Mariam Al-Aqeel, Kuwait’s Finance Ministerby Kudakwashe Muzoriwa
Kuwait has approved the 2020/21 budget projecting a KWD 9.2 billion ($30 billion) deficit, another huge deficit for the sixth year in a row due to lower oil prices and production cubs in line with the country’s commitment to the Organisation of Petroleum Exporting Countries (OPEC), according to the local newswire, KUNA.
Mariam Al-Aqeel, Kuwait’s Finance Minister said that the deficit is projected at KWD 9.2 billion ($30 billion), higher than 2019/20’s estimate of KWD 8.27 billion, after the transfer of 10 per cent of total revenue to the Future Generations Fund, which is managed by Kuwait Investment Authority.
Al-Aqeel said that the government will likely draw from the state reserve fund to finance the deficit because the National Assembly refused to approve the public debt law.
Kuwait’s 2020/21 budget estimated revenues of KWD 14.8 billion, a six per cent decrease compared to the current year’s projections. Over 87 per cent of revenues come from oil, whose income is projected at KWD 12.9 billion ($42.5 million), around seven per cent less than the current year’s estimates.
Non-oil revenue is set to reach KWD 1.87 billion, an increase from KWD 1.25 this year. The finance minister said that the expenditure was based on the average price of Kuwait oil at $55 a barrel.
Kuwait, OPEC’s fourth-largest producer, has lagged behind its Arabian Gulf neighbours in introducing fiscal reforms since the 2014 oil slump. The lack of a new public-debt law has made it impossible for the government to finance its deficit by borrowing, forcing it to rely on the General Reserve Fund’s assets instead.
Aqeel said that the government plans to push for the approval of the debt law to allow the government to borrow to meet the budget deficit because borrowing is cheaper than withdrawing from sovereign wealth funds.
Additionally, the finance minister said that the government wants another reform bill passed by the Assembly to allow the government to impose selective taxes like other GCC states.