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We should not be overtaken by the recent surge in oil prices, which is hitting $ 75 a barrel. Actually, we as a country need about $90 a barrel to balance our budget and stop any deficits in our balance sheet. This will not happen if we are not managing our spending and continue to freely demand more benefits. At the same time, our government is almost at a loss regarding what to do. We must realize that time is hard in the absence of cash, which is causing havoc. We and everybody else know that we do have enough cash, but managing it is the problem.
We can borrow when we are short of funds because lower oil price means low income. The concern is for how long will the state and the government go on borrowing. Financial institutions along with international banks are willing to keep lending. The reason for the disagreement with the parliament is related to how long we are going to borrow. The main worry is that the state will become addicted to borrowing and will continue the same path, as we don’t see any way other than the current option of borrowing.
Calling on our oil industry to reduce or to take voluntary cuts in salary is a noble request, but 50 percent cuts and reductions is an outrageous request. Yes… we agree that the salary level is very high, such that it may be the highest among the national oil companies. This is going on without any guidance, such that the benefits are exceeding basic salary such as the benefit for driving on the roads, which is paid on a daily basis to employees for driving five hours in the oil field. This is apparently called road risk or hazardous. However, driving all over Kuwait doesn’t take more than two hours. Having a good administration with a clear vision and objective is a tough challenge to face. Nothing will come easy without sacrifices; but what is important is that we must have a clear mind and proper line of thinking, as well as determination, if we need to get out of this deep hole of uncertainty and indecision. We must push some leadership to succeed.
By Kamel Al-Harami
Independent Oil Analyst