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Mon 1 Aug 2016 07:37 PM

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Kuwait plans to raise fuel prices by 73% from September

Cabinet endorses plan to set gasoline prices in harmony with the average rates across the Gulf region

Kuwait plans to raise fuel prices by 73% from September

Kuwait's cabinet said on Monday that it would raise the prices of gasoline in the energy-rich Gulf state beginning in September, state news agency KUNA reported.

The cabinet also endorsed a plan to "start rationalising fuel subsidies" whereby the prices will be restructured in harmony with the average rates in the other member states of the Gulf Cooperation Council.

The ultra gasoline grade rose to 165 fils a litre from 95, the super grade rose to 105 from 65 and premium grade rose to 85 from 60, the agency reported.

Kuwait is making subsidy and spending cuts to save money as low oil prices push state finances into the red.

Kuwaiti Finance ministry undersecretary Khalifa Hamada said at the end of 2015 that "rationalising" subsidies would save the government 2.6 billion Kuwaiti dinars ($8.7 billion) over three years.

Kuwait plans to issue up to 3 billion dinars ($10 billion) in US dollar-denominated bonds and sukuk in international markets to help plug its budget deficit for the current 2016-17 fiscal year, the finance minister said last month.

It will also borrow up to 2 billion dinars ($6.6 billion) in debt from the domestic market in conventional and Islamic instruments, said Anas al-Saleh, who is also deputy prime minister and acting oil minister.

Earlier this year, ratings agency Moody's said that while fuel subsidy reforms in the Gulf region will help address pressure from low oil prices on public finances, these measures alone will not be enough to bring the governments' budgets back into surplus.

Savings from increased fuel prices in the six Gulf nations will average 0.5 percent of gross domestic product (GDP) - around $7 billion - this year against an estimated deficit of 12.4 percent of GDP, the ratings agency said.

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