KUWAIT: As Oman yesterday became the latest Gulf state to announce the lifting of subsidies on fuel and other services after Saudi Arabia, UAE and Bahrain, the government inched closer to hiking the price of petrol and some other services and now it appears the decision is only a matter of time. The ministry of finance yesterday began what looks like an organized campaign, posting messages on its Twitter account to explain that the goal of any financial measure is to ensure the durability and sustainability of “honorable living” standards for the people.
The ministry said that the planned measures would have positive results in the medium and long term and categorically denied that it will meet the budget deficit through measures that will hurt the people. “The government plans to re-direct subsidies to ensure that they reach people who need it,” the ministry said in a tweet.
The ministry did not illustrate the steps it plans to undertake but ministry undersecretary Khalifa Hamada said in press statements that the ministry will probably submit today recommendations for increases in fuel prices and other services to the Cabinet’s economic committee. After approving them, they will be sent to the Cabinet for approval. It was not immediately known when the Cabinet will study the recommendations.
In the past few days, Saudi Arabia and Oman joined UAE in hiking fuel prices, while Bahrain raised prices of diesel and kerosene and said it is studying a similar measure for petrol. The actions come as oil prices continued their retreat and have shed more than 60 percent since mid-2014. All GCC states have already announced or projected budget deficits this year.
Kuwaiti lawmakers have however warned the government they will not approve any increases in the cost of public services or fuel or any other measure that may overburden citizens long accustomed to heavily-subsidized services. MP Abdullah Al-Turaiji called on the government yesterday to stop what he called its “agitated” push for hiking the prices of fuel and services and not to forget that the victims of such measures will be simple citizens.
Turaiji said that the government has been talking about options to tackle the budget deficit without knowing that in all the scenarios, people will be hurt. He said that although a majority of MPs have opposed any steps to raise prices, the government is pushing hard to impose such measures in contradiction with statements by ministers that the planned measures will not affect low income people.
Turaiji called for the government to slow the process of taking decisions to tackle low oil revenues in order to consult the National Assembly either through a special session or through the Assembly bureau to find the best way to deal with the drop in revenues. He said that MPs are aware of international reports predicting that oil prices will continue its decline, but they differ with the government that any measures must not include any harm to citizens, especially low income people.
The lawmaker said that Assembly committees have reports which indicate unrestrained squandering of public funds by government institutions and bureaucrats, adding that controlling government spending must precede any other measures. Turaiji said a correct implementation of the privatization plan will provide additional revenues to help face the sharp drop in oil income.
MP Faisal Al-Kandari meanwhile sent a series of questions to Finance Minister Anas Al-Saleh about the issue. He asked about the truth in media reports about a government plan to raise the price of fuel and electricity. He also asked for the cost of subsidies and other benefits for the people in the budget.
Oman’s official ONA agency reported yesterday that the government will hike fuel prices, charges for public services and corporate taxes in the face of falling oil prices. “The council of ministers has approved a number of measures to face the consequences from the drop in oil prices and to ensure fiscal sustainability,” ONA cited a cabinet statement as saying. “These measures include reducing government spending and boosting non-oil revenues through raising taxes on corporate profits, increasing charges on some public services and amending fuel prices to be in line with international levels as from mid-January,” the statement said.
The cabinet also approved a 2016-2020 development plan and the 2016 budget but provided no details. Omani oil revenues have dropped by more than 60 percent as oil prices have plunged from about $100 a barrel to below $40 since mid-2014. It has projected a budget deficit of $6.5 billion for 2015, but the International Monetary Fund has warned the shortfall may be much bigger.
By B Izzak and Agencies