Kuwait will hold legislative elections today to elect 50 of the 65 seats in the National Assembly. The elections occur
Kuwait will hold legislative elections today to elect 50 of the 65 seats in the National Assembly.
The elections occur at a time when Kuwait is facing a fiscal deficit of at least $12.8 billion and a sharply negative economic outlook. Heavily reliant on hydrocarbon exports, the country’s fiscal breakeven oil price for this year’s budget was $86 a barrel—double the current price, putting its finances under pressure. The COVID-19 pandemic has reduced both the demand and the price of oil to unprecedented levels. Neighbouring Gulf States have introduced taxes and cut subsidies to bolster their finances and ride out the low price environment, a move reminiscent of their response to the 2014 oil crash.
With the deficit at record levels, the government will need parliamentary approval to spend beyond the current deficit and possibly tap its Future Generations Fund, the country’s oil-based sovereign wealth fund.
The fate of the public debt bill will be decided after today’s elections and it will be the first legislative challenge for the new Emir of Kuwait, Sheikh Nawaf Al Ahmad Al Sabah. The long-awaited bill would allow Kuwait to boost borrowing, thus easing the economic crisis and attendant social pressures.
Wake up smarter with an assessment of the stories that will make headlines in the next 24 hours. Download The Daily Brief.