Kuwait’s government has set apart KD45.5 billion ($155 billion) in the country’s five year developmental plan to spend on various projects and on human resource development, according to a senior official.
Kuwaiti MP Mohammed Al-Jabri said that the amount is expected to finance 523 projects from 2015 to 2020, Kuwait Times reported.
Out of the total amount, Jabri said that KD29.5 billion will be spent on economic development and KD15.5 billion on human resource development. The remaining amount of KD500 million will be spent on administrative development.
The government plans to spend around KD6.6 billion next year, Jabri said. The plan needs to be debated and approved in the National Assembly, media reported.
The announcement comes as oil prices plummeted below $50 per barrel, the weakest since 2009, due to a supply glut in the market.
However, the sharp drop in oil prices will not strain the government’s ability to spend on projects, said Jabri. He added that the capital spending in the five year plan is calculated with oil at $45, much below the $75 taken as an estimate in Kuwait’s last budget.
Kuwait, like many other GCC states, is largely dependent on oil revenues to finance its public expenditure. Spending in the near-future by the OPEC member is expected to remain largely unchanged due to the fiscal reserves that it amassed due to high oil prices over the last few years.
However, if the oil prices continue their free-fall in the international market, the Gulf country stands a risk of posting a deficit soon.
To counter that, Kuwait’s government, which dedicates billions of dollars each year in welfare spending, has said that it will look at slashing subsidies.
The GCC member has already announced a subsidy cut on diesel, kerosene and aviation fuel. It is considering a phase-out of subsidies on petrol and other utilities but no concrete steps have been taken in that direction yet.