Kuwait's parliament approved on Thursday a 2008/09 budget with record expenses of 19 billion dinars ($71.67 billion) despite warnings by the central bank to contain spending to tackle record inflation.
The OPEC producer's expenses ballooned from last year's 7.49 billion dinars after the cabinet raised spending and agreed to increase salaries for citizens by 120 dinars to soften the impact of inflation which hit 10.14 percent in February.
Expenses are further to rise after government and deputies agreed to expand by 66.7 percent to 500 million dinars a fund designed to help Kuwaitis pay back private debts.
Additionally, the cabinet agreed this week to raise salaries by 50 dinars for Kuwaitis earning less than 1,000 dinars, bowing to pressure from MPs worried about the impact of inflation.
This move will cost an extra 186 million dinars, according to a report by parliaments' financial committee.
The budget has to be approved by the Gulf Arab state's emir before it takes effect.
The budget forecasts a deficit of 7.5 billion dinars but Kuwait is expected to post a surplus since the government has forecast oil revenues, the top income source, on a conservative estimate of just $50 per barrel.
US light crude, which trades at a premium to Kuwaiti crude, topped $134 a barrel on Thursday.
Kuwait posted a surplus of 11.44 billion in the 2007/08 fiscal year, according to preliminary figures.
State-owned Kuwait Investment Authority (KIA) is managing Kuwait's financial reserves, which rose 14.4 percent to 70.21 billion dinars in the last budget year to March, local media reports and parliamentary sources said last week
Central Bank Governor Sheikh Salem Abdul-Aziz al-Sabah told newswire Reuters last week the government should contain spending to help tackle inflation in the world's seventh-largest oil exporter.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.