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.’


Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 01 October 2020

Saudi Arabia looks to cut spending in bid to shrink deficit

  • Saudi Arabia has issued about SR84 billion in sukuk in the year to date

LONDON: Saudi Arabia plans to reduce spending next year by about 7.5 percent to SR990 billion ($263.9 billion) as it seeks to reduce its deficit. This compares to spending of SR1.07 trillion this year, it said in a preliminary budget statement.

The Kingdom anticipates a budget deficit of about 12 percent this year falling to 5.1 percent next year.

Saudi Arabia released data on Wednesday showing that the economy contracted by about 7 percent in the second quarter as regional economies faced the twin blow of the coronavirus pandemic and continued oil price weakness.

The unemployment rate among Saudis increased to 15.4 percent in the second quarter compared with 11.8 percent in the first quarter of the year.

The challenging headwinds facing regional economies is expected to spur activity across debt markets as countries sell bonds to help fund spending.

Saudi Arabia has already issued about SR84 billion in sukuk in the year to date.

“Over the past three years, the government has developed (from scratch) a well-functioning and increasingly deeper domestic sukuk market that has allowed it to tap into growing domestic and international demand for Shariah-compliant fixed income assets,” Moody’s said in a statement on Wednesday. 

“This, in turn, has helped diversify its funding sources compared with what was available during the oil price shock of 2015-16 and ease liquidity pressures amid a more than doubling of government financing needs this year,” the ratings agency added.