The oil price crisis has reduced Kuwait’s income, which depends almost entirely on the sale of crude oil
Kuwait only has the resources to pay its officials the salary for the next three months. If the situation does not change drastically in the coming weeks, August, September and October wages will be the last that Kuwaiti workers will be able to collect from the country’s funds. The authorities will then have to borrow or stop paying.
Barak al Sheetan, Kuwait’s finance minister, has blamed the drop in the price of oil for the situation in the country. The state budget is based on an average cost of $ 55 per barrel of brent, but the coronavirus crisis has wiped out that price, falling below $ 20 per barrel in April.
In order to cope with this income gap, the Kuwait authorities have used funds from their national reserve at a rate of almost 1.7 billion dinars per month, but that piggy bank is about to run out.
Kuwait, like five other economies in the Gulf countries, depends almost exclusively on oil revenues. For this reason, Kuwaiti Emir Sheikh Sabah asked Parliament to prepare a new law to plan the economic future of the country, in such a way that there would not be such an excessive dependence on crude oil.
However, the Parliament of Kuwait rejected the first bill that would have allowed the government to buy some time by issuing bonds. According to Al Sheetan, “If we had implemented this law in 2017 we would not be like this now.” However, other Kuwaiti MPs do not see it that way and are calling for comprehensive budget reform.
With an average price of $ 44 per barrel of brent in August, Kuwait’s future is not rosy. The Government wants to ask for 20,000 million dinars, over the next few years, but it must be the country’s Parliament who authorizes it. The salary of public servants is at stake.