Kuwait’s local banks have the ability to finance the state’s budget deficit, envisaged at $27 billion in the current 2015-16 fiscal year due to low oil prices.
However, Kuwait’s actual budget deficit may not reach that figure as the projection still depends on oil prices, which are currently unstable.
Borrowing from local and international markets is “inevitable” in case crude oil prices continue their downhill slope, says the Chairman of Kuwait Finance House (KFH) Hamad al-Marzouq.
In remarks published the Kuwaiti News Agency (KUNA), Al-Marzouq says the government of the Gulf nation is required keep current levels of public spending if it wants to maintain current level of economic activities.
Al-Marzouq’s comments were made during a panel discussion at the seventh Euromoney Conference-Kuwait, which started in Kuwait on Tuesday.
In the meantime, Kuwait’s Finance Minister, Anas al-Saleh, announced that his country has plans to issue bonds denominated in the local currency by the end of current year to help the state offset its budget deficit.
The minister explained that the state’s budget reliance on oil revenues is closely linked to “the structure environment of the country’s economy and the pivotal role the oil industry plays.”
He noted that his country has ten per cent of the world’s reserves of oil and is one of the world’s largest oil exporters.