Budget Blues: A Peek into Next Year's Startling Deficit
Budget for the years 2025-2026 in Kuwait is given the green light, predicting a shortfall of 6.3 billion dinars.
Ready for some hard-hitting financial news? Buckle up! The government has given the green light to the budget plan for the forthcoming 2025-2026 fiscal year, and guess what? It's a whopping 6.3 billion dinars in the red - that's 13% of our GDP, folks! And it's a significant jump from the 5.6 billion dinars deficit we faced in the previous year.
Now, you might think that means we're spending less, but think again. Current expenditures are staying put, but the total expenditures are still frighteningly high, pointing to the need for some serious structural reforms. According to Al-Jarida daily, these reforms are crucial to ensure we maintain long-term fiscal sustainability.
But what's causing this unprecedented deficit? Oil revenues are expected to plummet due to a dip in crude oil prices. However, growth in non-oil revenues is anticipated, thanks to new measures like a 15% income tax on multinational companies. The total budget for 2025-2026 stands at 24.5 billion dinars, marking a slight decrease compared to the previous budget, with a reduction in subsidies and capital spending.
Despite a decline in capital expenditures, the budget includes some starry-eyed plans to boost liquidity, increase non-oil revenues, and get our spending in check. The government's fiscal reform strategy includes a new public debt law, with a debt ceiling of a mind-boggling 30 billion dinars - that's up to 50-year bonds we're talking about! Plus, new laws to reprice government service fees are on the table. These measures are aimed at improving our financial liquidity, financing the deficit, and supporting future capital expenditures.
Experts are calling this budget a baby step on the road to deeper fiscal adjustments, with more reforms to come in the following months. These could include restructuring government units, privatization laws, and the gradual elimination of energy and water subsidies - like those in Saudi Arabia and the UAE. But without access to more localized budgetary documents, we can't say for certain what the future holds.
For now, let's just cross our fingers and hope for the best! As Al-Jarida daily puts it, the budget is more a conundrum than a celebration. So, folks, let's keep an eye on the government's fiscal maneuvering and see how it all turns out!
The upcoming 2024-2025 fiscal year budget, revealed recently, projects a significant decrease in general-news, with a deficit of 6.3 billion dinars - which equates to 13% of our GDP. This deficit is a substantial increase from the 5.6 billion dinars deficit in the previous year. The budget includes plans to include starry-eyed measures to boost liquidity, decrease non-oil revenues, and get our spending in check. The government's finance strategy involves the inclusion of a new public debt law with a debt ceiling of up to 30 billion dinars, which points towards the issuance of 50-year bonds. Such fiscal policies are prevalent in countries like Saudi Arabia and the UAE and are aimed at improving our financial liquidity, financing the deficit, and supporting future capital expenditures. The adoption of these political measures, along with potential restructuring of government units, privatization laws, and the gradual elimination of energy and water subsidies, will contribute to deeper fiscal adjustments in the coming months.
