Kuwait will cut spending by some 36 per cent, or seven billion dinars, to 12.1 billion dinars (Dh149bn) in its new budget by decreasing welfare payments and infrastructure investment, the head of parliament's budget committee said.
Last month, Central Bank Governor Sheikh Salem Abdul Aziz Al Sabah urged the government of the world's seventh-largest oil exporter to keep spending stable to help the economy increasingly getting hit by a global crisis.
The Opec member expects an income of KWD7.8bn, mainly from oil revenues, translating into a projected deficit of KWD5bn, said MP Adnan Abdul Samad yesterday after a committee meeting attended by the finance minister.
He said the 2009/2010 budget starting in April, which needs cabinet and parliamentary approval, was based on an oil price of $35 a barrel, down from $50 barrel last year. Oil revenues were put at KWD6.7bn, assuming an output of 2.2m barrels per day.
"We are still negotiating this price [$35] because in the committee we think we should be more cautious since oil prices are falling,"he said.
Kuwaiti crude, the country's main earner, fell to $36.86 a barrel on Tuesday, state news agency Kuna said yesterday, after it peaked at $135 a barrel in July.
Abdul Samad said contributions to social welfare funds would fall by KWD5.4bn this year, while costs of oil sales to state institutions would be going down by KWD1.2bn.
Investment for infrastructure projects would fall to KWD1.22bn, down from KWD1.66bn this year, he added. "If there are any changes then there will be only minor ones," Abdul Samad said when asked whether the cabinet might amend the figures.
Finance Minister Mustapha Al Shamali, who declined to comment after meeting MPs yesterday, said last month Kuwait would lower spending except salaries for state employees and capital expenditures.
Kuwait posted a preliminary budget surplus of KWD9.82bn in the first nine months of its 2008/2009 fiscal year to March. Expenditures were KWD8.73bn after initially assuming KWD19bn, while income was KWD18.55bn.
National Bank of Kuwait said in December Kuwait would post a surplus of KWD1.8bn in 2008-2009, down from KWD9.32bn in the previous year.