Kuwait endorses projected budget for the years 2025-2026, expecting a 6.3 billion dinar shortfall.
Chopping the Deficit: A Closer Look at Fiscal Year 2025-2026 Budgets
With the thumbs up from the government, the draft budget for the upcoming fiscal year is all set, estimating a 6.3 billion dinar deficit, equating to 13% of the country's GDP, marking a hike from the previous year's 5.6 billion dinars.
Despite current expenditures holding steady, the high overall expenditures raise a red flag, signaling the necessity for long-term structural reforms to ensure fiscal sustainability as pointed out by Al-Jarida daily.
Oil revenues are projected to take a hit due to a slump in crude prices. However, growth in non-oil revenues, slated to reach 2.9 billion dinars, will be fueled by fresh measures like a 15% income tax on multinational companies.
The proposed budget allocates 24.5 billion dinars, representing a miniscule decrease of 0.1% compared to the previous budget, with a reduction in subsidies and capital spending.
Notwithstanding the dip in capital expenditures, the budget includes strategies to boost liquidity, increase non-oil revenues, and optimize spending.
The government's fiscal reform blueprint encompasses a new public debt law featuring a debt ceiling of 30 billion dinars, permitting up to 50-year bonds, and the introduction of new laws to reprice government service fees. These steps aim to bolster financial liquidity, finance the deficit, and support potential future capital expenditures.
The budget is viewed as a vital stepping stone towards more extensive fiscal adjustments, with future reforms expected to involve government unit restructuring, privatization laws, and the phased elimination of energy and water subsidies - mirroring models adopted in Saudi Arabia and the UAE.
Interestingly, in U.S. Congress's H.Con.Res.14 for FY2025-2034, specific committees are mandated with deficit reduction targets. For instance, the Agriculture committee is tasked with cutting down the deficit by $230 billion, while the Armed Services committee faces a cap on a deficit increase of $100 billion.
In the state of New Hampshire, plans involve unspecified back-of-budget cuts of $95.5 million, a 3.8% increase in the Health and Social Services sector, a 7.2% boost for Resource Protection, and a 4.9% decrease in General Government expenses.
In New York City, the proposed FY2026 budget reaches $114.5 billion, cost-cutting measures on asylum seeker expenses by $2.4 billion, and new allocations of $325 million for rental assistance and $225 million for school nurses.
- The fiscal year 2025-2026 budget, set to address a 6.3 billion dinar deficit, introduces plans to decrease the deficit through increased non-oil revenues and optimized spending.
- The proposed budget includes strategic measures like a 15% income tax on multinational companies, aimed at boosting non-oil revenues and enhancing liquidity.
- In comparison to the previous budget, the proposed allocation for fiscal year 2025-2026 experiences a miniscule decrease of 0.1%, with a reduction in subsidies and capital spending.
- The government's fiscal reform blueprint for the general-news includes innovative steps like a new public debt law and the introduction of new laws to reprice government service fees, designed to support financial liquidity and potentially reduce the deficit.
