Kuwait needs to deliberate about expenses as oil prices continue to decline

As OPEC+ Countries continue to witness fall in earnings. Kuwait of all needs to be prudent about its expenditures. 

With the falling oil prices and growing state payments, experts have urged towards the need to reason with the country’s spending as the slump in oil prices will lead to notable revenue variances. With a severe fall in oil demand and the stoppage of factories in Asia, the main market for Gulf oil companies, Kuwait and other Gulf Cooperation Council (GCC) countries are experiencing budget overstretched.

Revoking unneeded huge capital schemes would decrease Kuwait’s budget from 22.5 billion U.S. dollars to 15 billion dollars. The coronavirus has prompted the Kuwaiti government to spend additional money on the needed expenses.

“But because of its small population, these pressures would be alleviated if the health ministry controlled the coronavirus spread.”

Anticipating the improvement of Kuwait’s economy to start after the first quarter of 2021, experts say that a quick solution to the current budget deficit is “to approve the public debt law and take advantage of low-interest rates in the global market.”

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other oil-producing nations, a group known as OPEC+, met on April 12 and finalized the deal of an output cut by 9.7 million barrels per day for May and June, or 10 percent of the global supply, to support oil prices amid the coronavirus pandemic.

Khaled Al-Fahdel, Kuwaiti oil minister, said Kuwait supports this consensus among OPEC’s member states.

The Kuwaiti government had imposed a nationwide curfew to contain the spread of the coronavirus. The government also closed stores, malls and barbershops as precautionary measures to curb the spread of the deadly virus.