Kuwait may cut its planned state spending next fiscal year as lower oil prices pressure its finances, a parliamentary official quoted preliminary estimates as saying on Sunday.
Adnan Abdulsamad, head of the parliamentary committee for budgets, said in a document obtained by Reuters that Ministry of Finance officials were estimating budget spending at KD19 billion ($65.2 billion) in the year starting next April.
Planned spending for the current fiscal year is KD23.2 billion, according to the document.
Abdulsamad said the estimates for the 2015/16 year envisaged the government running a budget deficit of KD2.8 billion, before deducting money for Kuwait’s Future Generations Fund (FGF), part of its sovereign wealth fund.
The FGF invests outside Kuwait. Contributions to the FGF would be cut back to 10 per cent of revenues next fiscal year from 25 per cent at present, the document said.
The 2015/16 estimates assume an average oil price of $60 per barrel and Kuwaiti oil production of 2.7 million barrels per day, down from a price of $75 and production of 2.9 million bpd in the current fiscal year, Abdulsamad said.
Kuwait’s budget plans are only rough guides to actual spending and revenues because of fluctuations in oil prices and the fact that the government often underspends its targets.
For example, the government posted a huge surplus of KD12.9 billion last fiscal year as it spent only KD18.9 billion, well below the KD21 billion originally planned.