Kuwait parliament passes budget with $22bn shortfall

Kuwait’s parliament yesterday passed an annual budget projecting a deficit of $22 billion, as lawmakers opposed government plans to impose taxes or reduce subsidies. The expected shortfall in the 2019/20 budget is equivalent to 15.7 per cent of Gross Domestic Product and amounts to a fifth year in a row that the oil-rich Gulf state has run a deficit. Kuwait’s annual budgeting was hit hard by a 2014 crash in oil prices.

Public revenues are estimated at $51.8 billion while spending is projected at $73.8bn, both slightly higher than last year’s projections. Revenues from oil are estimated at $45.4bn and comprise some 88 per cent of expected total public revenues. Lawmaker Adnan Abdulsamad, who heads parliament’s budget committee, said projections for oil income were predicated on a price of $55 a barrel. Lawmakers have persistently opposed any plans by the government to impose taxes or raise the cost of public services.

Abdulsamad however said that even if the government imposed taxes and raised charges for services, it would not be able to plug the budget deficit. Kuwait’s fiscal year runs from April 1 to March 31. Lawmakers urged the government to stop squandering public funds and undertake reforms. Over three-quarters of spending is allocated to wages and subsidies. Economic performance in Kuwait has been lacklustre in recent years, due to the downturn in oil prices.

The economy shrank by 3.5pc in 2017, before growing by just 1.7pc last year. It is projected to grow by 2.5pc this year. The emirate, with a native population of just 1.4 million, has a sovereign wealth fund worth more than $600 billion, providing a cushion for state finances. Around 3.3 million foreigners live and work in Kuwait.