Ministry mulls some subsidy cuts of over 30% – Bonus to end

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KUWAIT CITY, Feb 14: The Ministry of Commerce and Industry intends to reduce the subsidy value for some products by more than 30 percent, reports Al-Rai daily quoting sources. Sources disclosed the ministry is planning to reassess the prices of all subsidized products included in the ration cards, with the possibility of reducing the value in view of the continuous oil price decline.

On the consequences of reducing the value of subsidized products, sources pointed out there is a high probability that the value of subsidies for foodstuffs and construction materials will be lower compared to previous years. Sources explained this does not mean reduction of the ration card bill itself, considering the activation of the law on increasing subsidy for construction materials from KD 10,000 to KD 30,000.

Sources said the value of subsidies for some products will decrease compared to the disbursed quantity, which will affect the prices of items excluded from the ration card. Sources added the ministry will study the possibility of imposing sanctions on companies which neither implement the ration card system nor follow new instructions, affi rming the ministry is keen on protecting the rights of all parties involved — traders and consumers.

Meanwhile, the Civil Service Commission (CSC) will stop the payment of excellent job performance bonus to all State employees starting from March 2017, reports Al-Qabas daily quoting sources. Sources disclosed this year will be the last disbursement of the bonus pending the announcement of the government’s austerity measures.

Sources confirmed the CSC took this decision in line with the recommendation of the Ministry of Finance to rationalize consumption and expenditures in governmental bodies. Sources added the total amount of excellent job performance bonus for 54 governmental bodies surpassed KD 300 million, as the bonus ranges between KD 500 and KD 3,000 for an ordinary employee and an official respectively.

Sources clarified the bonus is still included in the budget for fiscal 2015/2016 but it will be removed in the upcoming budget.

Sources said the government has no right to reduce the salaries of employees but the law allows it to cancel the payment of annual or monthly bonuses to employees.

The current price of fuel is not considered dangerous to the budget or cause for deficit, as the government has approved the budget for fiscal 2016/2017 in which the cost for producing one liter of super is 63 fils — two fils less than the current price in the market, reports Al-Nahar daily quoting sources. Source said the average price of oil is $25 per barrel; hence, the price of one liter of fuel according to technical calculations is 47 fils and $16 will be added to that amount soon for other services like refinement and distribution so the price will be 63 fils.

Sources confirmed the government is working towards stabilizing the price of fuel as part of efforts to support the budget regardless of the economic situation. Sources said other countries have adopted the free fuel prices policy such that the consumers will benefit when the price is low while the country will not bear any additional cost.

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