KUWAIT: Finance Minister Anas Al-Saleh yesterday presented to the National Assembly details of the government's plan to cut subsidies and raise prices of fuel and public services as part of efforts to finance the budget deficit and reform the economy in the face of the sharp fall in oil revenues. Saleh said the price hikes will be implemented shortly, but provided no specific details to reporters about the size of the planned increases other than saying "they are like the figures published in the press".

The minister was speaking after he met with the Assembly bureau in the presence of Speaker Marzouq Al-Ghanem and 16 MPs. Parliamentary sources however said the government plans to raise the price of low-grade 90-octane petrol from 60 fils to 85 fils a litre and the price of high-grade 95-octane petrol from 65 fils to 105 fils a litre, while completely lifting subsidies on the ultra-grade petrol.

Regarding electricity, the plan proposes to keep the charges unchanged at 2 fils per kilowatt for consumption of up to 5,000 KW per month, raise the tariff to 5 fils a kilowatt for monthly consumption of between 5,000 and 10,000 KW and as high as 19 fils a kilowatt for any consumption above 10,000 KW. The minister only confirmed that the price hike for electricity will be gradual without providing figures, saying that it is not acceptable to charge millionaires the same tariffs like low-income people.

Saleh said the cut in subsidies is only a small part of the economic reform program, which also includes privatization and boosting the role of the private sector in the national economy. The minister said the main aim of the program is to "rationalize" the pattern of consumption in the country as the "current pattern is unsustainable amid the sharp decline in oil prices".

The minister said that he felt understanding from the lawmakers over the government's proposals, which will be gradually implemented to minimize their expected negative impact. He said MPs also spoke about the government's need to rationalize expenditure, adding that the government is working to stop squandering of public funds and cut spending.

The minister warned that the position of the budget is not encouraging after the price of oil collapsed from $120 a barrel to just $20 a barrel for Kuwaiti oil, which resulted in a huge deficit close to KD 12 billion. He said the fiscal surpluses made in the past 15 years have been transferred to the future generations' fund and the state reserve fund, "from which we will withdraw money to finance the budget deficit".

Saleh said the new measures, which aim at diversifying sources of income, will not undermine middle- and low-income people. He also assured that the government will prevent any unjustified hikes in prices as a result of the planned measures. Regarding subsidies in the next fiscal year budget, Saleh said the allocations have been cut to KD 2.9 billion from over KD 4 billion in the current year's budget.

Meanwhile, MP Khalaf Dumaitheer said that a majority of MPs reject the government's plan if it was not linked to certain preconditions. He said that if the government wants to lift subsidies, it should increase salaries of citizens by around KD 120 per month as a form of compensation.

Separately, a parliamentary committee probing alleged violations in Kuwaiti investments abroad has recommended to the Assembly to refer CEO of Kuwait Investment Authority (KIA) Bader Al-Saad and another senior official to the public prosecution to investigate the alleged violations.

By B Izzak