Kuwait City: The Gulf state of Kuwait, under financial stress due to low oil prices, plans to end all forms of public subsidies by 2020, a report published on Monday said.
A committee set up by the finance ministry to review all public subsidies said it plans to gradually reduce subsidies until it ends them completely by 2020, according to the report published by Al Qabas newspaper.
Public subsidies and social aid are estimated in the current fiscal year’s budget at over $3 billion, about five per cent of projected spending.
The oil-rich emirate has already lifted subsidies on diesel and kerosene which are being priced according to international oil price.
In September, Kuwait partially lifted subsidies on petrol sparking a political crisis that led to the dissolution of parliament and calls for new elections.
The government had also secured the backing of the parliament before it was dissolved to raise electricity and water prices paid by foreign residents and businesses, but exempted Kuwait citizens.
But the government agreed to compensate citizens for raising petrol prices by offering each driver some 75 litres (20 gallons) of petrol free of charge each month.
The hike, ranging from about 40 to 80 per cent depending on the type of fuel, went into effect on September 1 as part of reform measures to plug a budget deficit resulting from low oil prices.
It was the first such increase since 1998.
The Opec member recorded a budget shortfall of 4.6 billion dinars ($15.3 billion) in the fiscal year which ended on March 31, according to official figures.
Kuwait is projecting a deficit of $29 billion in this fiscal year which started April 1.