(MENAFN- Arab Times) KUWAIT CITY Jan 26 (Agencies): Kuwait on Monday projected a $24-billion deficit in its new fiscal year budget despite a massive spending cut to cope with plunging oil prices. Revenues for 2015-2016 are projected at $41.1 billion 43.6 percent down from estimates in the current year Finance Minister Anas al- Saleh said.
The budget slashes spending to $65.1 billion 17.8 percent below estimates in the current budget the minister said. Saleh said the budget for the year starting on April 1 was approved by the cabinet Monday but still needed to be debated by parliament.
Budget projections were drawn up 'to face the consequences of the sharp decline in oil prices' Saleh said. He said the government instructed ministries to rationalise spending. Kuwait relies heavily on income from oil whose price has crashed by around 60 percent since last June.
The price of Kuwaiti crude has plummeted from around $103 a barrel last year to about $41 a barrel currently. Kuwait projected a budget deficit in the past 15 fiscal years but ended up with a healthy surplus each year due to high oil prices and after having calculated crude income at conservative prices. But this year's deficit is the largest to date.
Oil income in the new budget is calculated on the basis of $45 a barrel down from this year's $75 a barrel while the country's average production is projected at 2.7 million barrels per day. Saleh said the government has no plans to cut wages and allocations for development projects in Kuwait which provides a generous welfare system to its native population of 1.25 million.
He said that based on the projections the breakeven price for oil the price needed to balance the budget is $77 a barrel. Sustained surpluses since 2000 have boosted fiscal reserves of the Gulf state's sovereign wealth fund to around $550 billion according to unofficial estimates.
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