Policymakers in Kuwait are evaluating the value of some of the economic choices they are confronted with, including possible changes to the many expensive subsidy schemes. The authorities will certainly need to come up with ways to enhance the standing of the Kuwaiti economy in a global perspective, having generally lagged behind fellow Gulf Cooperation Council (GCC) members.

By one account, the total cost of the subsidy programmes, including that for petroleum goods, amount to a prohibitive $18 billion. This is sizeable when compared with the total revenues for fiscal year 2014-15, projected to be $71.4 billion.

The budget for the fiscal year ending in March was prepared using an assumed average oil price of $75 a barrel, and with a projected deficit of $5.6 billion, just above 3 per cent of the country’s gross domestic product (GDP). Kuwait has an established record of registering satisfactory budgetary surpluses, year after year.

However, the possibility of suffering a real deficit cannot be ruled in the current fiscal year, on the back of steady drop in oil prices in the global market. They have sustained a more than 20 per cent fall in the space of weeks, and with no end in sight.

Understandably, a review of the too generous subsidy programme was echoed by the Emir of Kuwait, Shaikh Sabah Al Ahmad Al Sabah, during the recent opening of a parliamentary session. He called on legislators to find ways to stop what he termed as the squandering the country’s resources.

Such expressions are indicative of the level of frustration and the need to find new means to address the challenge. The subsidy scheme amounts to lost opportunities in utilising treasury revenues.

Likewise, the Emir pressed for diversifying the economy away from oil, and for good reason. The petroleum sector is exceptionally vital for the well-being of the economy, making up 93 per cent of treasury income, 85 per cent of exports and 40 per cent of GDP. Unfortunately, of all the GCC countries, Kuwait is the most dependent on oil for the functioning of its economy.

Officials are said to be reviewing elements of the subsidy programme, like restricting the provision for diesel and Kerosene. Reportedly, a similar review is underway for electricity and water.

Reduced subsidies for oil derivatives could have another positive effect, namely limiting the emission of carbon dioxide. The GCC states are among the top 14 emitters of CO2 worldwide.

The fact that Kuwait is the most underperforming economy among GCC countries ought to raise concerns within decision-making entities, and not keep taking matters for granted. The recent ‘Doing Business 2015’ report issued by the World Bank ranked Kuwait No. 86 among 189 economies. This is the worst within the GCC, and considerably behind the UAE, which is 22nd globally.

In his remarks, the Emir raised the issue of ensuring jobs for youth entering the marketplace. Overall unemployment is reportedly a mere 1.5 per cent versus 8.1 per cent in Oman and 7.4 per cent in Bahrain, as per the ‘Rethinking Arab Employment’ report issued by the World Economic Forum. Yet, a primary reason for this relates to willingness of state entities at extending employment opportunities for locals, something not sustainable for the long term good.

The writer is a Member of Parliament in Bahrain.