Finance minister says it might take advantage of fall in prices amid debt crisis
Kuwait is considering buying assets in Europe after prices fell in response to the region's debt crisis, but it has not made specific decisions, the country's finance minister told Reuters.
"We haven't defined any sector investing in Europe, but all sectors are open for us to go through. The sectors that we get some benefit out of, yes we'll go for it."
"All that is now presented to us, we have to think it over, study it well, and then decide," Finance Minister Mustapha al-Shamali said in an interview late on Friday before a meeting of Gulf Arab finance ministers and central bank governors in the UAE.
He said Kuwait was aware of potential investments in "a lot of things, different sectors" across a wide range of countries in Europe, but did not elaborate.
Kuwait, the world's No. 6 crude oil exporter, is one of the richest countries globally with its sovereign wealth fund, Kuwait Investment Authority, managing over $290bn of assets. It has stakes in Citigroup, Daimler AG and Agricultural Bank of China among others.
The European crisis "will have an impact but it is not that much for us. We are just waiting for the Europeans, what they are to do with their economy," Shamali said.
But the minister said Kuwait expected to increase government spending moderately in the next fiscal year that will start on April 1. Officials are now beginning to study next year's budget.
"It will be increased, especially...where the capital expenditure will be more," he said, referring to infrastructure and development projects.
In the current fiscal year, the budget was based on a global oil price of $60 per barrel and the breakeven oil price - the price at which Kuwait posts a budget surplus - is over $85, Shamali said. Brent crude oil is currently around $110.
Next year's budget oil price hasn't been decided yet "but it will be increased from the previous year", he said. On next year's breakeven price, "We hope it will be the same but we don't know. We have to study it."
Last month, Shamali said Kuwait had no plans to boost budget spending in the next fiscal year. He did not explain on Friday why the policy outlook had shifted towards slightly higher spending.
Since 2004, Kuwait's budget spending has tripled to a record KD19.4bn ($71bn) planned for the current fiscal year.
Asked if the government was considering whether to issue bonds, Shamali said it was not, and that an issue next year was unlikely. The only reason that an issue might occur would be to stabilise the money market through the central bank, he said.For all the latest banking and finance 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.
Kuwait might fare better, if they concentrate on the homefront for once, and get their house in order, before going into other people's backyards. Kapeesh?