Kuwait will need $116b over the next six years to finance its budget deficit caused by low oil prices, according to a report by International Monetary Fund (IMF).
The Gulf country posted its first budget shortfall of $15 billion for the first fiscal year following 16 years of surpluses after which it adopted a series of austerity measures including raising fuel, power and water prices. The government reportedly plans to end its subsidies programme by 2020.
However, despite the reforms, Kuwait’s fiscal and external accounts have deteriorated significantly, the report said.
It urged authorities to move ahead with their plans to further cut energy subsidies estimated at $7 billion in last year’s budget. It called for controls on the wage bill, which accounts for almost half of public spending, and measures to increase of non-oil revenues.
Earlier this year, its cabinet approved a plan aimed at subsidy reforms, economic diversification and controlling the wage bill. However, this was opposed by the previous parliament as well as the majority of candidates in the run-up to the election scheduled for November 26.
Kuwait has dipped into its $600 billion sovereign wealth fund and plans to issue domestic and foreign bonds in order to cover its financial needs. This year, it revealed a deficit of $29 billion.