Kuwait's 2020-21 budget deficit surges to record high at $35.5bln
Kuwait's budget deficit increased by 175 percent in 2020-21 to 10.8 billion dinars ($35.5 billion) as oil prices plunged and COVID-19 took a toll on businesses in the country.
According to the Finance Minister, Khalifa Hamada, the country witnessed the highest deficit in its budgetary history, the Kuwait News Agency (KUNA) reported.
While revenue dropped 38.9 percent to 10.5 billion dinars, expenditure rose 0.7 percent to 21.3 billion dinars.
Oil revenue fell 42.8 percent in 2020-21 to 8.8 billion dinars, while other revenue fell 6.5 percent to 1.7 billion.
Salaries and subsidies in the fiscal year accounted for 73 percent of spending.
“The deficit is attributed to the sharp decline in oil prices and minimal government operations as a result of the COVID-19 pandemic. The cabinet is prepared to discuss the closing accounts with the parliament and to move forward in implementing real, effective, and sustainable solutions to the challenges facing public finances," Reuters cited Hamada as saying in a statement.
"There is an urgent need for economic reforms, and all parties, especially the executive and legislative authority, must work to address all imbalances," Governor of Kuwait's Central Bank Mohammad al-Hashel said in a conference last month.
On July 17, global rating agency S&P cut Kuwait's rating by one notch citing its lack of a funding strategy to finance its deficit.
"The downgrade reflects a persistent lack of a comprehensive funding strategy despite the central government's ongoing sizeable deficits," it said.
Kuwait is facing liquidity risks as the parliament has not agreed to government borrowing due to a standoff.
Kuwait's crude oil gained $1.83 during Friday's trading sessions to close at $72.83 per barrel.
