By Staff writer
Low oil and gas prices continue to hit Kuwait's economy, according to data from the Central Statistical Bureau
Kuwait's foreign trade surplus shrank 76.6 percent from a year earlier to KD402 million ($1.33 billion) in the first quarter of 2016, data from the Central Statistical Bureau has showed.
In the previous quarter, the surplus reduced by 68.7 percent to KD1.05 billion ($3.5 billion) as low oil and gas prices affected the local economy.
In March, Kuwait's central bank governor warned that authorities may have to change monetary policy if the government does not act urgently to cut a budget deficit caused by low oil prices.
Mohammad al-Hashel said the legislative and executive branches of the government needed to prove to the rest of the world that public finances were sustainable.
In January, Kuwait's finance ministry said that the Gulf oil exporter's 2016-17 draft budget forecasts a deficit of KD12.2 billion, nearly 50 percent higher than the previous year, due to falling crude prices.
The ministry said expected revenues will be KD7.4 billion while expenditures are expected to be KD18.9 billion.
The deficit for the fiscal year, which runs from April 1 to end of March, includes KD0.7 billion contribution to the Generations Fund, a nest egg for when oil supplies diminish or the economy suffers other shocks.
Kuwait is planning to develop five islands off its coastline into business free zones, part of the country’s bid to diversify its economy away from its focus on energy.
The free zone plans will be based on international models and will depend on foreign investment to bring to fruition.