Kuwait eyes subsidies and tariff cuts to curb inflation

Kuwait's Government unveiled yesterday a proposal to combat record inflation that would cut import duties on food and increase subsidies, but faces pressure from parliament to hike state salaries as well.

Rising prices are a political hot potato in the only Gulf oil exporter that does not peg its currency to the weak dollar.

Inflation topped 10 per cent in February, prompting popular demands for the state to spend its $43 billion (Dh158bn) surplus to offset rising food and rental costs.

Commerce and Industry Minister Ahmad Baqer told the newly-elected parliament, which has demanded immediate action on inflation, that the global rise in commodities prices, population growth and the country's reliance on food imports were to blame for the rising cost of living.

"The government has understood the negative effects of Kuwait's inflation, which has taken an upward trajectory recently," he said.

"Tackling this phenomenon is a national task that requires the government to continue to take the necessary measures."

As well as reducing import duties and transport costs on food products, the proposal would both increase the value of state subsidies and the number of subsidised products.

Baqer also proposed an increase in farm subsidies in Kuwait and said the government could work with other Gulf states to invest in food production and farming to secure food supplies to a region that is largely desert.

Gulf states are looking to invest in farming countries to boost food security.

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