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Current oil price fall won't squeeze Kuwait's budget - experts

By Osama Jalal KUWAIT, Oct 25 (KUNA) -- The current sharp drop in oil prices would not force Kuwait to squeeze its budget or cut spending, but it raises alarms about the sustainability of the national economy's reliance on oil revenues, industry experts concurred Saturday.
There is no fear about the negative impact to the decline in current oil prices on Kuwait's budget, former Director of OPEC Research Division Hasan Qabazard told KUNA.
He added that Kuwait can withstand the current crisis as its budget's hypothetical price for oil barrel stands at USD 75, below the real price of oil on the market.
Kuwait also has huge financial reserves that can help it overcome the current deterioration even if prices fell more, he assured.
The price of Kuwait crude oil per barrel went up by USD 1.22 to stand at USD 81.33 pb on Friday compared to USD 80.11 the day before, said Kuwait Petroleum Corporation (KPC) here on Saturday.
Qabazard, however, underscored that the government has to embark on an urgent and well-studied plan to diversify the national economy away from oil revenues.
There is an urgent need also to rationalize expenditure and to reform energy subsidies in a way that does not harm low-income people, he said.
On an OPEC role to stop the slide in oil prices, he stated that OPEC can't make any move before its anticipated meeting in November.
He argued that OPEC should not intervene in the current situation, it rather should have to let the market address the imbalance itself.
The oil market is expected to recover in the coming months and even to make up its losses in the long-run, he forecasted.
Meanwhile, oil strategies expert Dr. Jassem Beshara begged to differ.
The oil price slip would inevitably affects Kuwait's budget and could even force the state to set priorities for spending on projects, Beshara told KUNA.
He went on to say that the price retreat rings alarm bells to warn the Kuwaiti government that the reliance on oil revenues is unsustainable.
Beshara agreed that Kuwait can adapt to the current crisis, but not for too long.
Kuwait has previously coped with a price of USD 50 per barrel and even USD 30 per barrel, he said.
He suggested that the government has to invest more in petrochemical projects and non-petroleum businesses to raise the added value of the Kuwait oil and to diversify the economy. (end) osj.ibi