Kuwait Petroleum keen on preserving public funds, CEO says

The Kuwaiti government announced in March a reduction in its energy sector’s operating spending. Above, the Shuaiba oil refinery. (AFP file photo)
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Updated 26 July 2020

Kuwait Petroleum keen on preserving public funds, CEO says

  • Kuwaiti government earlier cut its energy sector’s operating spending

DUBAI: Kuwait Petroleum Corporation (KPC) wants to preserve public funds to counter the economic consequences of the coronavirus pandemic, the state-owned firm’s CEO said, after it started to implement austerity measures and reduce expenses.

In statement Hashem Hashem said the company paid great attention to the observations of all oversight bodies, both external and internal, state news agency KUNA reported.

Hashem said the company’s commitment “to adhere to the principle of full cooperation with the parliament to complete its oversight role in order to achieve the common goal of serving Kuwait’s interest.

In March the Kuwaiti government announced a reduction in its energy sector’s operating spending as oil prices collapsed because of coronavirus outbreak.

Hashem in an earlier memo said KPC and its subsidiaries would “rationalize spending and review their priorities for the financial year of 2020/2021, while ensuring the safety and continuity of the company’s operations.”

Among KPC’s cost-cutting measures are the termination of services of non-Kuwaitis under permanent and private contracts as well as subcontractors.

Kuwait National Petroleum Company, a KPC subsidiary, likewise abandoned plans to build the 1.5-gigawatt Al-Dabdaba solar complex which would have been operational by 2021.

It was likewise reported that the Ahmadi City buildings project has been cancelled after being considered as ‘a non-strategic project.’

‘Lower for longer’: Fed’s warning on interest rates

Updated 24 September 2020

‘Lower for longer’: Fed’s warning on interest rates

  • The Fed cut rates to near zero in March and took other steps to combat a recession

WASHINGTON: Federal Reserve Vice Chair Richard Clarida said on Wednesday that policymakers “are not even going to begin thinking” about raising interest rates until inflation hits 2 percent, comments aimed at cementing the public’s understanding of the US central bank’s new approach to monetary policy.

“Rates will be at the current level, which is basically zero, until actual observed PCE inflation has reached 2 percent,” Clarida told Bloomberg Television, referring to the Fed’s preferred measure of prices. PCE inflation tends to be somewhat lower than the better-known consumer price index.

“We could actually keep rates at this level beyond that. But we are not even going to begin thinking about lifting off, we expect, until we actually get observed inflation equal to 2 percent. Also we want our labor market indicators to be consistent with maximum employment.”

The Fed cut rates to near zero in March and took other steps to combat a recession that took hold as businesses shut down and consumers stayed home to fight the spread of the coronavirus.

Clarida said that with further government aid from Congress and the steps the Fed has already taken, the US economy could return from the current “deep hole” of joblessness and weak demand in perhaps three years.

To aid that process, the Fed in late August revised its approach to monetary policy to commit to lower rates for longer periods of time, allowing the risk of higher inflation to try to encourage a stronger economic recovery and more job gains for workers. A follow-up policy statement last week gave more specific guidance about future decisions, but questions remain about what the new approach will mean in practice.

Clarida said there should not be any confusion: Rates will not increase until labor markets recover and prices hit the Fed’s target.

“So lower for longer, and we have given some observable metrics,” for judging when a rate hike debate might begin, he said.

Decisions about any possible overshoot of inflation are “academic” at this point, he added, and can be made once the economy rebounds.