Executive Summary
Prices for crude oil have fallen by over 65% since mid-2014. With most investment banks and internationalagencies, including World Bank and IMF, expecting the lower oil prices to persist throughout 2016, the prized surplus of fiscal and current account positions is expected to detriorate to low single digits for Kuwait. Kuwait continues to be extremely reliant on oil for revenues. On an average, hydrocarbon revenues accounted for c.80% of overall revenues in the past five year period (2009-2014). While part of the oil revenue is saved as sovereign wealth fund, most is channelled to the local economy in the form of wages for public sector employees, large scale subsidies (energy, electricity and water), capital transfers and generous grants for its citizens. The deteriorating fiscal situation amid the lower oil price environment warrants relook at ways to augment revenue streams and curb wasteful expenditures.The slump in oil prices, has renewed focus on containing current expenditures, prioritizing capital expenditures and introducing measures to rationalize subsidies. Job creation for nationals and the need to increase the role of private sector in the economy, is also widely stressed.
