The Kuwaiti government has set capital spending in the five-year development plan starting in April at KD 45.5 billion ($155 billion), a majority of which will be spent on projects and development of human resources, MP Mohammad Al-Jabri said yesterday.

The draft plan was debated yesterday between Minister of Social Affairs and Labor and Planning and Development Hind Al-Subaih and the National Assembly’s financial and economic affairs committee, said Jabri, the committee’s rapporteur.The plan needs to be debated and approved in the National Assembly in the coming few weeks.

Jabri said that the government assured the committee that spending on projects will not be affected by the sharp drop in oil prices that sent the price of Kuwaiti crude from above $110 a barrel in June to as low as $43.21 a barrel at close of trading on Friday. He said that the amount is projected to finance 523 projects during the plan’s period of 2015/2016 to 2019/2020.

Jabri said that KD 29.5 billion will be spent on economic development and KD 15.5 billion on human resource development, while the remaining KD 500 million will be spent on administrative development. As for next year, the plan envisages spending KD 6.6 billion, Jabri said.

The lawmaker added that the ministries of oil and oil have agreed to calculate oil at $45 a barrel, way below the $75 a barrel adopted in this year’s budget. This means oil revenues will be 60 percent of the KD 18.8 billion projected oil income for this year, provided production remains the same. The actual income however will greatly depend on oil prices.

If the same conditions remain throughout the next fiscal year, Kuwait is certain to post its first budget deficit after 16 consecutive years of windfall that boosted the country’s fiscal reserves to around $550 billion. Oil income makes up around 94% of public revenues in Kuwait.

While insisting to keep capital spending intact, the government has vowed to cut current spending, especially subsidies. It has already started by scrapping subsidies on diesel, kerosene and aviation fuel and is considering similar measures for petrol, electricity and water.

Source: Kuwait Times