Kuwait’s finance minister said on Wednesday that an increase in oil revenues due to higher crude prices would not cover the Gulf state’s budget obligations and he called for radical economic reforms.
Kuwait’s budget would need oil prices of $90 per barrel to eliminate its deficit, the minister, Khalifa Hamada, said in a statement. Brent crude was trading at $67.86 a barrel at 1310 GMT on Wednesday.
“We must address the scarcity of financial resources and the depletion of liquidity in the treasury (the General Reserve Fund) as soon as possible, and they must be accompanied by radical economic and financial reforms that contribute to reducing expenditures and increasing non-oil revenues,” Hamada said, adding he had full confidence in parliament’s cooperation.
Kuwait’s finances are heavily dependent on oil income and a combination of lower prices due to the COVID-19 pandemic, as well as a continued stand-off between government and parliament on implementing measures such as a law allowing the state to borrow, have put it on the brink of a liquidity crunch.
“Issuing bonds and other solutions are not reform solutions, but rather temporary measures that must be taken to fulfil the immediate obligations represented by salaries and subsidies, which constitute more than 71 percent of the state’s total spending,” Hamada said.