(MENAFN- Arab Times) kuwait city june 10 (agencies): the kuwaiti government has decided in principle to end subsidies on diesel fuel but will deal with any negative impacts on consumers before implementing the decision the cabinet said. last month the opec member's government warned that spending outpaced revenues and this could lead to a budget deficit in 2017/2018 after years of surpluses. 'the council of ministers has decided in principle to stop subsidies on diesel' a statement said late monday. but the cabinet is waiting for a study by the higher planning council on ways to deal with possible negative effects on consumers.
oil minister ali al-omair told parliament three weeks ago that ending subsidies on diesel would save around $1 billion (735 million euros) a year out of total subsidies of around $18 billion. diesel is currently sold at around $0.20 a litre. the step is one of several recommendations by a government committee formed last october to review subsidies on all services and commodities after costs have skyrocketed.
finance minister anas al-saleh told parliament the average annual growth in public spending was 20.4 percent during the past decade against a 16.2 percent for revenues. the ministry has urged major cuts in subsidies saying it was impossible for the state to sustain growth in wages and continue them. between 2005 and 2013 subsidies rose more than fourfold from $4.1 billion to $18 billion an annual growth rate of 23 percent the ministry said. oil income rose from $45.9 billion in 2005 to $106 billion last year. the minister has said that if oil prices remain at around $100 a barrel kuwait will post an estimated budget deficit of 2.3 billion in the 2017/2018 fiscal year.
last month the international monetary fund warned kuwait to contain a rapid rise in public wages and subsidies to safeguard the economy against oil price shocks. kuwait is also revising subsidies on electricity water and petrol currently sold at well below cost. kuwait has boasted a budget surplus in each of the past 14 fiscal years helping to increase its sovereign wealth fund to over $500 billion local media said. meanwhile the cabinet members took note of a letter from tunisian president moncef marzouqi to his highness the amir sheikh sabah al-ahmad al-jaber al-sabah inviting him to visit tunisia.
issues they reviewed outcome of his highness the amir's recent visit to tehran and his talks with iranian president dr hassan rouhani on ways of boosting bilateral relations and regional islamic and international issues of mutual interest. kuwait and iran also signed cooperation agreements and mous part of the two countries' keenness to achieve more constructive cooperation said the statement. his highness sheikh jaber al-mubarak briefed the cabinet about outcome of his recent visit toe beijing and his talks with chinese president xi jinping which reflected common desire to move the bilateral relations to a new level.
the talks dealt with political economic trade and educational domains. kuwait and china said the statement signed cooperation agreements and mous in oil investment media and publication. the two countries also voiced desire to cooperation over the silk city and its economic belt. the cabinet on the other hand approved appointment of ahmad marshad al-sulaiman yusuf hamad al- roumi and abdulaziz saud ishaq in the amiri with the rank of a minister.
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