By Staff writer
National Assembly’ finance panel rejects IMF plans, amid warning of economic turmoil
Kuwait’s National Assembly has rejected proposals by the International Monetary Fund (IMF) to impose taxes and life subsidies on public services.
The IMF put forward the plans in order to reduce the state budget deficit, but the assembly’s financial and economic affairs committee refused to accept them, citing its opposition to measures which would come at the expense of Kuwaiti citizens.
Kuwait’s revenues have dropped since June 2014 due to a slump in oil prices, with the value of crude falling almost 60 percent. Oil income contributes to about 94 percent of public revenues in Kuwait.
The IMF’s proposals were based on the projection that oil prices are not likely to rebound, and speaking to local media, MP Mohammad Al Jabri said: “We have to be transparent with the Kuwaiti people that the Kuwaiti economy is facing real problems.”
However, he added that the committee insisted any treatment of the economic situation must not negatively impact Kuwaiti citizens, and called for alternative solutions.
He suggested that measures could include effective implementation of zakat (Islamic taxation), the activation of the Build-Operate-Transfer law, and health insurance schemes.
Kuwait is projecting a budget deficit of KD7 billion ($23.2 billion) in the current fiscal year – the first shortfall after 16 years of surpluses that have helped Kuwait accumulate foreign reserves worth $592 billion.
Government measures to have already address the economic situation include the lifting of subsidies on diesel, kerosene and aviation fuel. It is considering lifting or reducing subsidies on electricity and petrol.