The World Bank’s country manager for Kuwait has reportedly praised the country’s decision to raise petrol prices by up to 83 per cent as a “politically and economically bold move”.
In comments carried by state news agency KUNA, Firas Raad said energy subsidies represent a major burden on public finances in the country, accounting for an estimated 1.3 to 5.7 per cent of GDP.
The agency cited Raad as saying subsidies had resulted in major distortions in the economy and radically high levels of energy consumption.
He also said that the current environment represented an opportunity to reform subsidies with minimal impact on consumers while generating fiscal savings and diversifying the economy.
“In the medium and long run, subsidy reforms are expected to encourage a move towards more labour-intensive industries, which in turn is expected to result in greater job creation for Kuwaiti nationals,” KUNA said.
The fuel price reforms, which were announced last week, have been met with opposition from local MPs who have called for protection for local citizens.
A meeting between lawmakers is due to be held this week to discuss the hike, according to Kuwait Times.
The publication cited local MPs as saying among the options being considered are whether to provide citizens with direct compensation following the price increase or to offer them a limited quantity of petrol every month at current prices.
Another local publication, Annahar, quoted sources as saying that the planned fuel price increase date next month could be pushed back until the end of the year to discuss the impact on Kuwaiti citizens.
The new prices will be less than half of those in Europe and the lowest in the GCC, according to KUNA.