Kuwait Approves Budget with $40 Bln Deficit

Kuwait approved the state budget despite a row at the National Assembly. (Asharq Al-Awsat)
Kuwait approved the state budget despite a row at the National Assembly. (Asharq Al-Awsat)
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Kuwait Approves Budget with $40 Bln Deficit

Kuwait approved the state budget despite a row at the National Assembly. (Asharq Al-Awsat)
Kuwait approved the state budget despite a row at the National Assembly. (Asharq Al-Awsat)

Kuwait’s National Assembly approved Tuesday the government budget for the fiscal year 2021-2022, despite a standoff between members of the parliament.

Speaker Marzouq al-Ghanim said that the budget was passed with a slim majority with 32 MPs out of 63, including 16 ministers in favor and one against, while 30 opposition lawmakers refused to vote.

The budget, proposed by the government in January, projected $76.65 billion in expenditure for the fiscal year that started on April 1, with revenues amounting to $36 billion and a deficit of $40 billion, reported the Kuwait News Agency (KUNA).

The vote came amid heated discussions between the opposition deputies and the government.

The ministers, who are also members of parliament, voted on the budget by standing after members of parliament occupied their seats. They also stood at the entrance to the hall while some deputies rapped on tables in an attempt to disrupt the discussions.

Chaos ensued in the parliament after the vote, and the guards entered the hall to restore order after a fight broke out between the rival MPs.

Ghanim had called for the special session to debate the budget at a time when the nation is trying to boost state finances and support an economy that shrank 9.9 percent in 2020 due to low oil prices and the coronavirus pandemic.

“We have the right to request a special session because all regular sessions have been disrupted,” Ghanim said, referring to opposition tactics.

Opposition lawmakers insist on questioning Prime Minister Sheikh Sabah al-Khalid al-Sabah on the constitutionality of a motion passed in March to postpone any questioning of the premier until the end of 2022, in addition to other issues such as corruption.

Kuwait is currently going through one of the most severe financial crises, as most of the General Reserve Fund has been depleted due to the decline in oil prices and the repercussions of the pandemic.

Finance Minister Khalifa Hamada said after presenting the draft budget that the assets of the Future Generations Fund are growing, but the General Reserve Fund suffers from liquidity challenges.

On Monday, Hamada said that despite the great challenges in the state budget, the executive authority is committed to observing the standard of living of citizens, implementing development projects, stimulating economic growth and supporting the growth of domestic product.

Some 71.6 percent of expenditure is allocated for job support, the minister revealed, while some 15 percent of total spending would go towards development projects, chief among them infrastructure and residential ones.

The draft budget was prepared on the basis of an average oil price of $45 per barrel and a production rate of 2.4 million barrels per day, while the breakeven between expenditures and revenues requires a price of $90 per barrel.



Dollar Hovers as Investors Focus on Israel-Iran Conflict ahead of Fed Decision

US dollar banknotes are seen in this photo illustration taken February 12, 2018. REUTERS/Jose Luis Gonzalez/Illustration/File Photo
US dollar banknotes are seen in this photo illustration taken February 12, 2018. REUTERS/Jose Luis Gonzalez/Illustration/File Photo
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Dollar Hovers as Investors Focus on Israel-Iran Conflict ahead of Fed Decision

US dollar banknotes are seen in this photo illustration taken February 12, 2018. REUTERS/Jose Luis Gonzalez/Illustration/File Photo
US dollar banknotes are seen in this photo illustration taken February 12, 2018. REUTERS/Jose Luis Gonzalez/Illustration/File Photo

The US dollar dipped against the yen and steadied against the Swiss franc on Wednesday, as fighting between Israel and Iran prompted investors to scoop up safe havens, while a Federal Reserve decision later on rates kept volatility subdued.

Israel has bombarded arch-enemy Iran over the past six days to halt its nuclear activity and has asserted the need for a change of government in the Islamic Republic.

The US military is also bolstering its presence in the region, Reuters reported, stirring speculation about US intervention that investors fear could widen the conflict in an area with critical energy resources, supply chains and infrastructure.

Iranian Supreme Leader Ali Khamenei said in a statement read by a state television presenter on Wednesday that his country would not accept US President Donald Trump's call for an unconditional surrender.

The dollar has resumed its role as a safe haven, having gained around 1% against both the Japanese yen and Swiss franc since last Thursday. On Wednesday, theurrency took a breather, edging fractionally lower against the yen and the franc and more noticeably so against the euro and the pound.

"The dollar is still a safe haven because of its depth and liquidity, so, yes, the structural forces are diluting the dollar safe-haven activities, but they're not eroding them completely," said currency strategist Rodrigo Catril at National Australia Bank.

"But in a scenario of big risk aversion, the dollar will still gain support, but maybe not to the same extent it has managed in the past."

Against a basket of six other major currencies, the dollar is still down around 8% so far this year, as confidence in the US economy and the reliability of Trump's administration as a trading and diplomatic partner has faded.

With the Fed's decision on interest rates just hours away and US markets closed on Thursday for the Juneteenth federal holiday, activity in currencies was muted.

Against the yen, the dollar fell 0.3% to 144.845 and was steady against the franc at 0.8175 francs.