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The Kuwait government needs to implement a gradual but sustained adjustment of current spending in the wake of the collapse in world oil prices, which has hit the state’s fiscal and current account balances, and slowed growth in 2014-15 to almost zero, the IMF says.
The slide in oil prices to below half year-ago levels saw the emirate post an ‘actual’ budget deficit for the first time since 1999-2000 as crude revenues for the year ending 31 March 2015 fell to KD22.5bn, from KD29.5bn in the previous year. In its latest Article IV consultation with Kuwait, the IMF urges the Kuwaiti authorities to focus on reducing rigidities in its budget, while continuing with subsidy reform, introducing wage reform, and improving the “efficiency of capital expenditure to strengthen non-oil growth.” Even with the fall in oil prices, Kuwait remains reliant on oil exports for over 90% of its revenues.
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