ABU DHABI, Oct 22, (Agencies): Kuwait is considering buying assets in Europe after prices fell in response to the region’s debt crisis, but it has not made specific decisions, the country’s finance minister told Reuters.
“We haven’t defined any sector investing in Europe, but all sectors are open for us to go through. The sectors that we get some benefit out of, yes we’ll go for it.”
“All that is now presented to us, we have to think it over, study it well, and then decide,” Finance Minister Mustapha al-Shamali said in an interview late on Friday before a meeting of Gulf Arab finance ministers and central bank governors in the United Arab Emirates.
He said Kuwait was aware of potential investments in “a lot of things, different sectors” across a wide range of countries in Europe, but did not elaborate.
Kuwait, the world’s No. 6 crude oil exporter, is one of the richest countries globally with its sovereign wealth fund, Kuwait Investment Authority, managing over $290 billion of assets. It has stakes in Citigroup, Daimler AG and Agricultural Bank of China among others.
The European crisis “will have an impact but it is not that much for us. We are just waiting for the Europeans, what they are to do with their economy,” Shamali said.
But the minister said Kuwait expected to increase government spending moderately in the next fiscal year that will start on April 1. Officials are now beginning to study next year’s budget.
“It will be increased, especially ... where the capital expenditure will be more,” he said, referring to infrastructure and development projects.
In the current fiscal year, the budget was based on a global oil price of $60 per barrel and the breakeven oil price — the price at which Kuwait posts a budget surplus — is over $85, Shamali said. Brent crude oil is currently around $110.
Next year’s budget oil price hasn’t been decided yet “but it will be increased from the previous year”, he said. On next year’s breakeven price, “We hope it will be the same but we don’t know. We have to study it.”
Last month, Shamali said Kuwait had no plans to boost budget spending in the next fiscal year. He did not explain on Friday why the policy outlook had shifted towards slightly higher spending.
Since 2004, Kuwait’s budget spending has tripled to a record KD 19.4 billion ($71 billion) planned for the current fiscal year.
Asked if the government was considering whether to issue bonds, Shamali said it was not, and that an issue next year was unlikely. The only reason that an issue might occur would be to stabilise the money market through the central bank, he said.
Al-Shimali also said Saturday the 91st session of the Gulf Cooperation Council (GCC) committee on financial and economic cooperation dealt with a range of issues with emphasis on the planned customs union, the railway network and the financial crises.
“The meeting, attended by GCC Secretary-General Abdullatif Al-Zayyani and governors of the central banks of the GCC member states, discussed the impacts of the global financial crisis on the economies of the region,” he told KUNA on the sidelines of the meeting.
“We’ve adopted several recommendations relating to the completion of the preparations for the customs union, the operating mechanism of the working team of the project, the formation of an authority for the union made up of director general of customs offices of the GCC countries,” Al-Shimali disclosed.
“We managed to iron out the technical problems relating to the union and reach understanding on almost all points of disagreement,” he said, affirming that the customs union will come into being soon.
As for the GCC railway project, the meeting requested working out a detailed study on the launching of a regional authority for the project and finalizing the engineering designs in 2012 in collaboration with the railway and transport committee of the GCC Secretariat, he said.
The meeting reviewed the outlook of the global economy in the light of a report by the International Monetary Fund (IMF).
“We exchanged views on the global financial crises and recommended enhancing the contacts with the world’s major economic blocs, notably the European Union,” he noted.
“The issue of the sovereign debt crisis of the Euro-zone and its possible spillover effects on the GCC economies came to the fore during the meeting,” Al-Shimali went on.
“We have reached agreement to amend article 36 of the basic system of the GCC panel on economic arbitration and forward the amended system to the 32nd session of the GCC Supreme Council for final endorsement,” he pointed out.