Senior official says state spending may drop of $65bn in next fiscal year as lower oil prices puts pressure on finances
Kuwait may cut its planned state spending next fiscal year as lower oil prices pressure its finances, a parliamentary official quoted preliminary estimates as saying on Sunday.
Adnan Abdulsamad, head of the parliamentary committee for budgets, said in a document obtained by Reuters that Ministry of Finance officials were estimating budget spending at 19 billion dinars ($65.2 billion) in the year starting next April.
Planned spending for the current fiscal year is 23.2 billion dinars, according to the document.
Abdulsamad said the estimates for the 2015/16 year envisaged the government running a budget deficit of 2.8 billion dinars, before deducting money for Kuwait's Future Generations Fund (FGF), part of its sovereign wealth fund.
The FGF invests outside Kuwait. Contributions to the FGF would be cut back to 10 percent of revenues next fiscal year from 25 percent at present, the document said.
The 2015/16 estimates assume an average oil price of $60 per barrel and Kuwaiti oil production of 2.7 million barrels per day, down from a price of $75 and production of 2.9 million bpd in the current fiscal year, Abdulsamad said.
Kuwait's budget plans are only rough guides to actual spending and revenues because of fluctuations in oil prices and the fact that the government often underspends its targets.
For example, the government posted a huge surplus of 12.9 billion dinars last fiscal year as it spent only 18.9 billion dinars, well below the 21.0 billion dinars originally planned.