KUWAIT: The finance ministry said on Sunday that it plans to take serious measures to achieve "financial sustainability” that include raising charges for public services, reducing the huge bill of subsidies and placing a cap on public spending, in addition to reviewing employment and wages.
In the first financial forum held by the ministry in the presence of representatives of government departments, the ministry said it plans to "reprice public services and state land and revise subsidies”. "Kuwait is an extremely generous state” said Finance Minister Dr Anwar Al-Mudhaf, in a reference to uncontrolled spending which has been rising at a fast rate, causing a sharp increase in budget deficits.
Mudhaf said that the assets of the state reserve have almost diminished from KD 33.6 billion in 2015/2016 to less than KD 2 billion currently, using them to meet accumulative budget deficits totaling KD 32.2 billion over the past nine fiscal years. The ministry also drew a gloomy picture of the country’s finances in the next four fiscal years, 2025/2026 to 2028/2029, estimating an accumulated budget deficit of KD 26 billion if things remain unchanged under the assumption that oil prices will average $76 a barrel.
The ministry said it plans to reduce the budget deficit through rationalizing spending by fixing spending at its current level of KD 24.5 billion through to the fiscal year 2027/2028. It will also be accompanied by diversifying sources of income to reduce almost total dependence on oil income by raising non-oil revenues from KD 2.7 billion now to KD 4 billion in the 27/28 fiscal year.
The ministry is also exploring ways to save part of the spending on wages and subsidies. The minister said on average, the wages bill accounted for 75 percent of public spending, as government salaries increased from KD 9.9 billion in 15/16 to KD 14.5 billion in 23/24, a staggering rise of 85 percent. Subsidies increased by 45 percent from KD 3.1 billion to KD 5.9 billion during the same period.
Kuwait is projecting a deficit of KD 5.9 billion in the current fiscal year 2024/2025, which started on April 1. The country posted a surplus only once since 2015/2016, of KD 6.4 billion in 2022/2023.