#Kuwait Projects $40 Billion Deficit As Infighting Delays Reform - Bloomberg

Kuwait Projects $40 Billion Deficit As Infighting Delays Reform - Bloomberg

Kuwait forecast its eighth consecutive budget deficit for the year starting April 1, unveiling a fiscal plan that sees a near-7% rise in spending as political bickering delays reforms and stymies borrowing.

The shortfall is projected at 12.1 billion dinars ($40 billion), 13.8% below the current year’s estimate of 14 billion dinars, according to the finance ministry. Kuwait won’t be transferring 10% of total revenue to the Future Generations Fund, or wealth fund, in line with a law passed by parliament last year to halt such transfers in years of deficit. The move was part of a series of urgent measures aimed at preserving liquidity in the General Reserve, or treasury, which is being rapidly depleted due to a drop in the price of crude, the main source of income for the Gulf Arab state.

The budget “is not immune to the global challenges brought on by the Covid-19 pandemic and lower oil prices,” Finance Minister Khalifa Hamada said in a statement Monday. “We are in a transitional phase that requires concerted efforts for economic recovery and growth.” Budgeted capital expenditure is up 20% on the current year’s estimate, he said.

The minister didn’t say how the budget gap will be financed. Kuwait still doesn’t have a public debt law enabling it to borrow and hasn’t been to the market since a debut Eurobond in 2017. Lawmakers have opposed borrowing to cover the deficit and say the government should better manage finances before resorting to debt. That’s left investors facing uncertainty.