Kuwait’s budget for 2019/’20 – same story over last 5 yrs
So far in the current fiscal year which started April this year, Kuwait is spending more than what it is earning. This has been the case over the last five years, and our financial reserve is being used to cover the deficit.
Our income is estimated to be about $52 billion but our expenses are $76 billion, resulting in a net deficit of $14 billion or KD4 billion. This is likely to increase due to the additional expenses expected this year. The budget is based on a barrel price of $55 for K u w a i t crude.
The actual cost for balancing our budget should be much closer to $77 a barrel but the Brent crude oil price will not exceed any level above $70 in the coming 15 months, or by the end of the first quarter of next year. Out of the total earnings of $53 billion, majority go for paying salaries and subsidies for electricity, water and food, leaving very little, if any at the end, for domestic investments, projects and growth.
Our budget has been on a rise annually without any sign of cost cutting; nobody seems to listen or care. It seems everyone wants to take advantage of our wealth without realizing that Kuwait is using its central bank reserve to balance the budget but nothing much is left, and in few years it will vanish. Almost $45 billion was consumed in the last five years, and very little remains, which can last just for another two or three years at the most. Not balancing our budget and exceeding our earnings is nothing new for Kuwait.
The sad aspect about this is that nobody is taking any action, and our deficits are increasing. Neither the government nor the parliament are serious, as our MPs also tend to demand more and more financial gains from the government in the form of benefits, and the government gives in, as it is concerned and afraid of any sign of interpellation against any of its members.
The repeated questions regarding looking for new sources of income is falling on deaf ears. The same is happening with the suggestions to privatize some of our oil industries and government offices; they too are falling on same deaf ears. It is a tragedy that no one seems to care about the economy of the country and its current state of finance. For how long will we depend on the use of our financial tools and reserves? The day will come when we will run out of both. At the same time, oil is losing its value in the international markets and will never regain its value of above $60 a barrel. It is a sad story to tell.
By Kamel Al-Harami Independent Oil Analyst