Fuel price hike to ‘affect’ economic situation, standard of living: experts

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KUWAIT CITY, Aug 3: For the second consecutive day, the topic of speculation in Kuwait has been the government’s decision to increase the fuel prices, with predications being made about the possible implementation of the decision in the month of November instead of September, reports Al-Qabas daily. Ministry of Commerce and Industry (MoCI) insists that this price increase will not affect the prices of commodities but it could lead to some limited impact on certain commodities.\

It affirmed that immediate arrest warrants will be issued against those who increase the commodity prices without any justifications and they will be referred to the Public Prosecution. Meanwhile, economic experts have varied opinions concerning this decision; however, they agree that it will affect the economic situation and the standard of living in the country.

Furthermore, managers of various restaurants stressed that the increase in fuel prices will lead to increase in food delivery charges, such that the charges will be increased by 10 percent for delivering to nearby locations and by 15 percent for far locations. Also, owners of roaming taxis revealed that they are waiting for the decision to be implemented in the beginning of September to determine the rate of increase in taxi fares, indicating that the fares could increase by 250-500 fils.

Regarding automobile sector, experts are expecting a boost in the demand for small-sized cars and smart cars with new technology for controlling fuel consumption. They indicated a growth of not less than 20 percent of the sale of vehicles with four cylinders. Meanwhile, Director of Shale Center for Economic Studies Jassem Al-Saadoun criticized the government for delaying the decision to increase the fuel prices, as he believes it should have been taken much earlier.

He considers the impact of this decision to be very marginal and it will likely provide the state with KD 200 million annually. In addition, reliable sources highlighted the difficulty in identifying the budget savings that the state will achieve due to increased fuel prices.

They said they are expecting the fuel subsidy to be reduced by KD 140 million annually in case the oil prices continue its current rate of $40 per barrel. In this context, Al-Anba daily reported that reliable sources revealed about the current coordination between officials of Ministry of Commerce and Industry and the General Traffic Department to hold a meeting in order to discuss the new tariff of roaming taxis after the fuel prices are increased in September.

Also, Director General of Easy Homez Kuwait Real Estate Company Omar Al-Nasser indicated that the decision to lift the fuel subsidy will negatively impact the foreign property owners but will have positive effect on the country’s real estate sector. In this regard, economic analyst Hajaj Bukhadour considered the decision as positive in terms of dealing with the traffic congestion on the roads and streets of the country.

He stressed that it will boost the principle of rationalization in the society, confront the phenomenon of fuel smuggling and redirect the subsidy for developing the country. On the other hand, the Consumer Cooperative Societies Union rejected the government’s decision to increase the fuel prices, insisting that it will affect the prices of consumer commodities and foodstuffs.

In addition, according to a report in Annahar daily, informed sources indicated that the prices of roughly 5,000 goods will be increased by 20 to 30 percent in the Kuwaiti markets due to the increased fuel prices. They affirmed that the public and logistic transportation sector will increase the fares of buses, taxis, half lorry and heavy vehicles after the fuel prices are increased, adding bakeries, factories, fruits and vegetable markets, laboratories and all service organizations will also increase their prices after the government’s decision is applied.

Meanwhile, the Kuwait Progressive Bloc has warned about negative reactions from majority of Kuwaitis, Bedoun residents and expatriates, particularly those with limited income and the retirees, concerning the new tendency of the government and its influential allies to place the responsibility of the budget deficit on the people. In a press statement, the bloc stressed that the social class of big capitalists is increasing their wealth without paying any taxes and any attention to their social and financial role which includes offering real jobs to citizens.

The Cabinet has launched a dangerous step by increasing the prices of fuel which will have negative impacts on the ordinary citizens and will lead to a wave of price increase of various services and commodities. The bloc declared its refusal of the decision to increase the fuel prices. It refused any actions that are aimed at resorting to the pockets of the citizens for compensating the budget deficit. It called all labor unions and NGOs to be aware of such actions that target the rights of citizens.

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