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Thu 8 May 2014 01:23 PM

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Kuwait urged to reduce subsidies

Reports say finance ministry wants a 15% drop in subsidies within two years

Kuwait urged to reduce subsidies

Kuwait needs to reduce subsidies by at least 15 percent in two years, according to the emirate’s finance ministry.

Sources in the ministry told local press there was a ‘general agreement’ among a specialised committee that the country needs to make the cut while maintaining subsidisation rates for basic services.

The committee, formed to study ways the government can cut its subsidies with limited social impact, is also said to have agreed that energy is likely to be one area where rations are expected to be enforced.

Energy subsidisation currently costs $8.9bn (KD2.5bn) annually, with Kuwait paying about $19.3bn (KD5.4bn) each year for subsidies on fuel, energy, construction material, and food.

Earlier this week, the International Monetary Fund (IMF) called on Kuwait to contain a rapid rise in subsidies, as well as public wages, to safeguard the economy against any oil price shocks.

The IMF said general subsidies, particularly on electricity and fuel, constitute seven percent of gross domestic product, and as high as a quarter of spending, which was about $70bn last fiscal year (KD19.5bn).

Jay 5 years ago

Fuel and construction won't effect the poor as they don't have cars due to salary restrictions on licences and wealth development companies can afford to pay their way so start here
This constant making expats pay more will not work they are creating the wealth for Kuwait don't penalise them for it make the rich pay the big six families own 50 % of the wealth
Tax company profits at a higher level would also be fairer