The Finance Ministry of Kuwait is set to implement significant measures aimed at achieving "financial sustainability." These measures include increasing charges for public services, reducing subsidy bills, and capping public spending, as reported by Kuwait Times.

Financial Status and Projections

Finance Minister Dr. Anwar Al-Mudhaf highlighted the dire state of the country's finances, revealing that state reserve assets have dramatically decreased from KD 33.6 billion in 2015/2016 to less than KD 2 billion currently. This reduction is attributed to meeting cumulative budget deficits totaling KD 32.2 billion over the past nine fiscal years. The ministry projects a bleak financial outlook for the next four fiscal years (2025/2026 to 2028/2029), estimating an accumulated budget deficit of KD 26 billion if the status quo is maintained, assuming oil prices average $76 per barrel.

Diversification of Income Sources

To address this financial challenge, the ministry plans to diversify Kuwait's income sources and reduce the near-total dependence on oil revenue. The aim is to increase non-oil revenues from KD 2.7 billion currently to KD 4 billion by the 2027/2028 fiscal year.

Planned Measures

The ministry's strategy involves:

• Raising Charges for Public Services: Adjusting fees for various public services to increase government revenue.
• Reducing Subsidy Bills: Cutting down on the extensive subsidies that contribute to the budget deficit.
• Capping Public Spending: Implementing strict limits on public spending to control the fiscal deficit.

Implications for Kuwait's Economy

These measures are essential for ensuring the sustainability of Kuwait's finances. The diversification of income sources and prudent fiscal management are expected to stabilize the economy, reduce deficits, and secure financial stability in the long term.