Kuwait and its Gulf neighbours are having to deal with oil prices that have dropped by more than half in a year to below $50 a barrel, with many forecasting deficits after enjoying huge windfalls from high crude prices over many years.
In the first figures released in its fiscal year that started in April, Kuwait’s finance ministry said revenues had dropped 42.5 per cent in the first five months to 7.3 billion dinars ($24.2 billion).
Oil receipts, which accounted for 94 per cent of total revenues, slid at a similar rate, it said.
The OPEC member is projecting a deficit of 7 billion dinars in this fiscal year — after posting a budget surplus in each of the past 16 years thanks to high oil prices.
Like its Gulf neighbours, Kuwait has built up huge fiscal reserves to help it weather the oil price drop.
The small emirate, which has a native population of just 1.3 million, has reserves worth $592 billion invested overseas, mostly in the United States and Europe.
The finance minister warned this summer the country is nonetheless facing a very difficult financial situation and the 2015-2016 budget forecast spending cuts of about 17 per cent.
The Gulf state already liberalised the prices of diesel, kerosene and aviation fuel at the start of this year and is considering lifting heavy subsidies on petrol and electricity.
Wealthy OPEC members led by Saudi Arabia have been driving the oil price slump, refusing to limit production as they seek to push new players — especially US shale producers — out of the market. — AFP