The Kuwaiti government has said it will prepare a comprehensive report on how it intends to diversify the economy within six months.
The report – proposed by MPs - is expected to include specific proposals and recommendations and assess how the country can develop its existing fish, agriculture and small scale industries and attract more foreign investment.
Kuwait’s revenues rely significantly on oil, increasing from 85 percent of the state’s total revenues in 2001 to 95 percent in 2013.
Finance Minister Anas Al Saleh on Tuesday warned the country would “inevitably” record its first deficit in nearly two decades within a few years.
Average growth in government spending over the past decade had dramatically outpaced revenue growth, at 20.4 percent to 16.2 percent, Al Saleh revealed, according to Kuwait Times.
The government has calculated that if oil prices remained at the current level of $100 a barrel, Kuwait would record a deficit of KD635m in 2017/2018 and accumulate deficits totalling KD177.9bn by 2034/2035.
Undersecretary of the Finance Ministry, Khalifa Hamada, said continued growth in spending would eventually deplete Kuwait’s foreign assets, currently estimated at KD146bn ($518bn).
He conceded public wages and subsidies would have to be reformed.
Wages soared from KD3.2bn to KD9.5bn between 2004-2005 and 2012-2013, according to government figures.
The total value of subsidies also quadrupled from KD1.16bn to KD5.05bn during the same period.
The government has been discussing axing subsidies for expats, who make up two thirds of the population, and the richest citizens, while overhauling the entire subsidy scheme.
On Wednesday, at the end of a two-day debate on the country’s economy, the government affirmed that it would not change subsidies without adequate studies and insisted that citizens’ income would not be compromised.
“There is no plan to undermine the income of citizens,” Al Saleh said.
“The government is not talking about impacting people’s income. We just want to rationalize subsidies to make sure that they reach those who need it. The aim is to safeguard national fiscal reserves.”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.
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