It is known that Kuwait’s economy is heavily reliant on oil. But that has also made it more vulnerable during economic downturns of crude oil prices globally. Last year, the onset of the coronavirus pandemic led to steep drop in oil prices, forcing oil-producing countries to slash their outputs.
More recently, a budget bill approved by Kuwait’s caretaker cabinet projects a $39.9 billion budget deficit for the fiscal year 2021-22. The Kuwaiti economy expects state revenues of KD10.9 billion in the new fiscal year compared to a revised estimate of KD7.5 billion for the current year, a media report said.
Acting finance minister Khaled Hamadeh told the media, “The country’s balance sheet is exceptionally strong, bolstered by our future generations fund, and one of the lowest debt-to-GDP ratios in the world. But the state’s budget is not immune to the global challenges brought on by the Covid-19 pandemic and lower [oil] prices.”
The economy’s budget deficit for the upcoming fiscal year was calculated based on an average oil price of $45 per barrel. This was up from $30 for the current fiscal year. A few weeks ago, the Kuwait’s Prime Minister Sabah Al Khalid Al Sabah put forth resignation of his cabinet to the emir.
It is reported that the resignation should be passed to the prime minister who will then submit it to the emir for approval, under the terms of Kuwait’s constitution. In recent years, political disputes have impacted the oil-rich nation, leading to several rounds of the parliament and cabinets dissolvement.