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Cabinet approves draft deficit budget SPENDING RISE LOWER THAN PAST DECADE

KUWAIT CITY, Jan 23, (Agencies): Kuwait’s Cabinet on Thursday approved a draft budget for the 2014-2015 fiscal year. Kuwait plans to raise its budget spending by 3.2 percent next fiscal year compared to this year’s plan, a Cabinet statement said on Thursday, a much slower rise than the past decade’s double-digit average.

The major oil producer expects to spend KD 21.86 billion ($77.3 billion) in its draft budget for the fiscal year starting in April, up by KD 681.9 million from the 2013/14 plan, according to projections discussed in a Cabinet meeting. That is well below the average annual spending rise of 19.2 percent in the last decade to 2012/13, according to Reuters calculations based on official data. The plan, which still needs Parliament’s approval, suggests Kuwait is following other Gulf states in adopting a more cautious fiscal policy, after warnings by the International Monetary Fund and others that regional governments could fall into deficit in a few years if they do not control spending.

Last month, Saudi Arabia revealed a 2014 budget which projected the slowest spending rise in a decade, while earlier this month Oman released a 2014 budget plan which will slow growth in spending sharply. Kuwait’s state revenues are projected at KD 20.07 billion next fiscal year, a Reuters calculation based on the official figures showed.

The budget plan is based on an oil price of $75 per barrel. Oil revenues are seen at KD 18.81 billion, or 94 percent of the total, the statement said. Since global oil prices are currently trading around $108, and Kuwait normally spends less than it plans because of frictions between the Cabinet and Parliament which slow investment schemes, the government looks set to post another large budget surplus next fiscal year. Investment spending next fiscal year is projected at KD 2.91 billion, or 13.4 percent of the total, the statement said. Subsidies would cost the state KD 5.11 billion, 6.1 percent more than in the current year’s plan. The government is conducting a politically sensitive review of subsidies, with a committee expected to report its recommendations this year. The new finance minister has said subsidies will be reduced in some cases but not eliminated altogether. The Cabinet thanked the ministry of Finance for preparing the new budget for fiscal 2014-2015 and urged all government ministries and agencies to exercise appropriate budgetary control over their expenditures to avoid deficits of any kind.

 

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