Kuwait cabinet approves budget with huge shortfall

Kuwait is struggling to balance its books after being hammered by a weak oil price. (AFP)
Updated 29 January 2018

Kuwait cabinet approves budget with huge shortfall

KUWAIT CITY: Kuwait on Monday approved its budget for the 2018-2019 fiscal year, projecting a huge deficit for the fourth year in a row because of low oil prices.
Next year’s deficit is estimated at $16.7 billion, or 13.5 percent of the OPEC member’s gross domestic product.
Finance Minister Nayef Al-Hajjraf told a press conference the government will withdraw from the state reserve fund and borrow on the domestic and international debt markets to finance the shortfall.
After posting healthy surpluses for 16 successive years, Kuwait has posted a budget deficit in each of the past three years after oil prices began to slide in mid-2014.
Hajjraf said the new budget projects revenues at $50 billion, up 12 percent on last year’s estimates after the oil price rose from $45 to $50 a barrel.
Oil income is estimated at $44.3 billion on a daily production of 2.8 million barrels.
Spending is projected at $66.7 billion, marginally higher than last year, the minister said.
He said government wages and subsidies account for 73 percent of the budget which takes effect on April 1.
It still has to be passed by parliament.
Just 18 percent of spending will go on development projects, Hajjraf said.
He said Kuwait will not impose value-added tax or other taxation without parliamentary approval.


IMF experts visit Lebanon amid worsening economic crisis

Updated 20 February 2020

IMF experts visit Lebanon amid worsening economic crisis

  • IMF team will provide broad technical advice
  • Lebanon has not requested IMF financial assistance

BEIRUT: A team of IMF experts met Prime Minister Hassan Diab on Thursday at the start of a visit to provide Lebanon with advice on tackling a deepening financial and economic crisis, an official Lebanese source said.

The IMF has said the team will visit until Feb. 23 and provide broad technical advice. Lebanon has not requested financial assistance from the Fund.

The long-brewing economic crisis spiraled last year as capital flows into the country slowed and protests erupted against the ruling elite over decades of corruption and bad governance.

Diab’s government, which took office last month, must decide what to do about upcoming debt payments, notably a $1.2 billion dollar-denominated sovereign bond due on March 9.

Lebanese President Michel Aoun meanwhile said on Thursday measures would be taken to hold to account all those who contributed to Lebanon’s financial crisis through illegal actions be they transfers abroad, manipulation of Eurobonds or other acts.

“There is information that we are still in need of with regards to the banking situation. There are measures that we will take to hold to account all who participated in bringing the crisis to where it is,” Aoun said, according to his Twitter account.

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One of Lebanon’s most influential politicians, Parliament Speaker Nabih Berri, said on Wednesday that debt restructuring was the best solution for looming maturities.

Lebanon will on Friday review proposals from firms bidding to give it financial and legal advice on its options, a source familiar with the matter said on Thursday. The government aims to take a quick decision on who to appoint, the source said.

So far, firms bidding to be Lebanon’s legal adviser are Dechert, Cleary Gottlieb, and White and Case, the source said.

Lebanon has issued requests for proposals to seven firms to provide it with financial advice.

The government on Wednesday formed a committee tasked with preparing an economic recovery plan that includes ministers, government officials, a central bank representative and economists, according to a copy of a decree seen by Reuters.