By B Izzak

KUWAIT: The National Assembly budgets committee yesterday approved the state budget after introducing changes due to lower oil prices and also approved budgets of independent public agencies. But it only approved the final accounts of just five such agencies, the head of the panel said. MP Adnan Abdulsamad said the fiscal year's budget deficit is projected at KD 14 billion even after the Assembly last week issued a law suspending the 10 percent deduction of public revenues in favor of the future generations fund.

Abdulsamad said the committee postponed the approval of the final accounts of most government bodies because of certain remarks against them. He said the panel refused to approve the final accounts of the state because the government failed to apply recommendations made by the committee in previous years.

The committee however approved the final accounts of five establishments and agencies because they will supply some KD 1.44 billion in much-needed cash to the state reserve fund, he said. The accounts of Kuwait Petroleum Corp were one of those approved. Abdulsamad said the income of KPC and its subsidiaries is projected to drop by KD 9.5 billion or 44 percent to KD 12 billion as a result of the sharp drop in oil prices and reduced production due to the OPEC+ deal.

He said spending by KPC and its companies is projected to drop by 45 percent to KD 11 billion. As a result, net profits by KPC and its companies are estimated to decline by 36 percent to KD 938 million. Abdulsamad said revenues in the fiscal year 2020/2021 are projected to slide by 53 percent to just KD 7.5 billion, of which oil income is estimated to make up 75 percent and the rest will be supplied by non-oil sources.

The huge deficit came as a result of calculating oil prices in the budget at just $30 a barrel, as recommended by KPC and the finance ministry, even though the price of oil currently hovers around $45 a barrel, which is 50 percent higher than estimates, Abdulsamad said. The lawmaker said the decision to adopt a low oil price comes as a precautionary measure, adding that if oil prices were adopted at $45 a barrel, the deficit would have been lower.

Spending in the budget is estimated at KD 21.5 billion, around four percent lower than the previous year despite adding KD 500 million in expenditures for countering the coronavirus crisis, in addition to KD 240 million to double the support for Kuwaitis working in the private sector. Abdulsamad said wages and related expenditures are estimated to make up some 56 percent of total public spending, while subsidies are estimated to make up some 17 percent or KD. 3.5 billion. Capital spending on projects is estimated at KD 2.8 billion or 13 percent of total spending.