Debate on rates delays fuel hike
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KUWAIT CITY, May 13: The prices of all types of fuels will be increased without exception. However, the reason behind the delay in increasing the fuel prices is that the government and the Parliament have not yet reached an agreement concerning the rate of increase, reports Al-Nahar daily quoting sources close to the higher committee for implementation of government’s economic reform document.
They explained that the persistence of the concerned authorities to increase the fuel prices is in line with the economic reform program, the implementation of which is vital for the country due to its huge budget deficit and reduced oil revenues. The current reform methods differ from those carried out in the past because of the size of the deficit and its expected effects in the future. The decision to increase the prices will be applied on all fuel types.
The sources stressed the determination and seriousness of the government to implement the necessary financial reforms, adding that a higher committee for following up the execution of the economic reform program has been formed along with subcommittees in various ministries and governmental bodies for this purpose.
In the same context, the International Monetary Fund (IMF) affirmed that the income loss of Kuwait has exceeded 20 percent of its gross domestic product (GDP).
It explained that it is expecting an average accumulative deficit of 7 percent from the GDP of the GCC countries in the year 2021 even after the reform programs are executed. This will result in deficit worth $900 billion in the budgets of GCC countries within five years and the overall governmental debt will reach 45 percent of the GDP of GCC countries.
In a report published by the Ministry of Finance based on the IMF data on amendment of financial policies in the oil-importing countries, it was revealed that the current year’s plans for financial reforms have not yet achieved any increase in the non-oil revenues but it is a serious start towards financial reform in the country.
It was indicated that the GCC countries must enhance its local production by 4 to 6 percent and reduce its expenditures by about 30 percent in order to achieve necessary balance with the oil price.
Regarding the difficult choices faced by oil-producing countries in controlling their expenditures, the report explained that difficult amendments in the core of the social relations between the citizens and the government in terms of laws relating to salaries and social benefits must be initiated. The decision needs procedures that will not negatively impact the social setup, particularly the education and health sectors.
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