Kuwait Times, Tuesday, Sep 1, 2020 | Muharram 13, 1442
Budget deficit projected at KD 14 billion
Kuwait:
The National Assembly budgets committee yesterday approved the state
budget after introducing changes due to lower oil prices and also approved
budgets of independent public agencies. But it only approved the final accounts
of just five such agencies, the head of the panel said. MP Adnan Abdulsamad said
the fiscal year’s budget deficit is projected at KD 14 billion even after the
Assembly last week issued a law suspending the 10 percent deduction of public
revenues in favor of the future generations fund.
Abdulsamad said the committee postponed the approval of the final accounts of
most government bodies because of certain remarks against them. He said the
panel refused to approve the final accounts of the state because the government
failed to apply recommendations made by the committee in previous years.
The committee however approved the final accounts of five establishments and
agencies because they will supply some KD 1.44 billion in much-needed cash to
the state reserve fund, he said. The accounts of Kuwait Petroleum Corp were one
of those approved. Abdulsamad said the income of KPC and its subsidiaries is
projected to drop by KD 9.5 billion or 44 percent to KD 12 billion as a result
of the sharp drop in oil prices and reduced production due to the OPEC+ deal.
He said spending by KPC and its companies is projected to drop by 45 percent to
KD 11 billion. As a result, net profits by KPC and its companies are estimated
to decline by 36 percent to KD 938 million. Abdulsamad said revenues in the
fiscal year 2020/2021 are projected to slide by 53 percent to just KD 7.5
billion, of which oil income is estimated to make up 75 percent and the rest
will be supplied by non-oil sources.
The huge deficit came as a result of calculating oil prices in the budget at
just $30 a barrel, as recommended by KPC and the finance ministry, even though
the price of oil currently hovers around $45 a barrel, which is 50 percent
higher than estimates, Abdulsamad said. The lawmaker said the decision to adopt
a low oil price comes as a precautionary measure, adding that if oil prices were
adopted at $45 a barrel, the deficit would have been lower.