Kuwait cuts spending and expects large deficit in 2015-16 fiscal year . . . . . . . . . . . Kuwait will manage with lower spending and a larger expected deficit in the next fiscal year on the back of lower income from oil, the finance ministry’s draft budget showed on Tuesday. The budget for the 2015-2016 fiscal year starting in April envisions government spending of KWD19.07 billion ($64.6 billion), which is 17.8% (KWD4.14 billion) lower than the current fiscal 2014-2015 year. The ministry said that through cutting waste, reducing non-essential expenditure and placing a limit on all government spending, more money will be saved. The finance ministry however said it will continue to allocate money to social welfare and infrastructure development spending. An amount of KWD1.21 billion will be devoted to the government’s sovereign wealth fund, the Future Generations Fund (FGF) that invests outside of Kuwait. This means that the amount allotted to the FGF will comprise 10% of the fiscal year’s revenues, compared with 25% now. The upcoming year’s fiscal revenues will take a heavy hit. Revenues are foreseen at KWD12.05 billion, compared with KWD20.07 initially expected for the current fiscal year. The makes the budget deficit at KWD8.23 billion, which the Kuwaiti government is planning to cover from its own reserves or using local and foreign debt. However, the Kuwait government’s budget plans are just preliminary guides to what really happens. The forecast does not mean that actual spending will suffer a sharp fall. In the last couple of years, actual spending levels have been much below planned spending, due to some political and bureaucratic conflicts. Bearing in mind that the first six months of the current fiscal year, where the government reported actual spending of KWD6.12 billion; whereas the initial draft projected spending of KWD11.61 billion for that period. This would mean that, if the government carried out the planned spending for the next fiscal year, it will still be equal or even more than the 2014-2015 actual spending, which should ease worries regarding a slowdown in economic growth. Still the outlined deficit and lower planned spending took its toll on markets. The Kuwait stock market retreated on Tuesday and the Kuwaiti dinar fell against a basket of currencies and the U.S. dollar, but it is expected to maintain its strong uptrend. #egyptyard
Posted on: Tue, 27 Jan 2015 11:49:04 +0000
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