Kuwait saves $229m since removing fuel subsidies
Kuwait has saved $229 million (KD70 million) since removing the subsidies on fuel, according to local media reports
The Gulf country introduced new fuel prices three months ago following the decision to remove subsidies on fuel. During that time the savings have averaged just over $76 million per month, according to Annahar daily, quoting government sources. The Arabic newspaper also revealed that Kuwaiti motorists have dramatically increased their use of Premium type (regular 91) fuel by 50 percent since the new prices were introduced.
Kuwait is planning to remove another set of subsidies from April 2017, with the introduction of new chips for electricity and water consumption. Earlier this year, Kuwait’s cabinet approved a strategy for subsidy reform, economic diversification and controlling the wage bill. However, this was opposed by the previous parliament as well as the majority of candidates in the run-up to the recent election.
Kuwait has dipped into its $600 billion sovereign wealth fund and plans to issue domestic and foreign bonds in order to cover its financial needs
Like other GCC states, Kuwait’s fiscal balance is dependent on the country’s hydrocarbon exports. Oil revenues have accounted for more than 90 percent of all government receipts for more than ten years. The Gulf country posted its first budget shortfall of $15 billion for the last fiscal year, following 16 years of surpluses after which it adopted a series of austerity measures. The government reportedly plans to end its subsidies programme by 2020.
The International Monetary Fund (IMF), in its latest report on Kuwait, said the country would need $116 billion over the next six years to finance its budget deficit. The IMF urged authorities to move ahead with their plans to further cut energy subsidies estimated at $7 billion in last year’s budget. It called for controls on the wage bill, which accounts for almost half of public spending, and measures to increase of non-oil revenues.