DUBAI: The International Monetary Fund on Monday urged Opec member Kuwait to introduce a package of reforms that includes imposing taxes and phasing out subsidies to plug a chronic budget deficit.
Kuwait, which heavily depends on oil for almost 90 per cent of its revenues, has been hit hard since crude prices crashed in mid-2014 and earlier this month approved a budget with a huge shortfall for the sixth year in a row.
Nevertheless spending, mostly on hard-to-reverse categories such as salaries and social aid, expanded by 25pc only in the past two fiscal years while the public wage bill has grown by a bout 6.0 percent annually, the IMF said.
Kuwait, which pumps 2.7 million barrels of oil per day, has huge fiscal reserves estimated at $644bn by the IMF.
Unlike other Gulf states, Kuwait has a lively parliament which has repeatedly blocked government plans to impose taxes or charges on public services.
“Delays in fiscal reforms would further amplify fiscal financing needs while slow progress on the structural front would dampen growth,” the IMF said in a report.
Published in Dawn, January 28th, 2020