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Kuwait Rising oil price means economic reforms VAT

KUWAIT CITY: The rise in the price of oil will help to keep Kuwait in the black and balance its budget, but the healthy economic situation means there is little motivation to push through much-needed reforms and long-term diversification of the country’s public finances, according to a report released on Wednesday.
The Kuwaiti cabinet released its latest budget this week for the 2018-19 financial year, beginning in April. It outlined plans to spend 20 billion Kuwait dinars ($66.7315 billion) during the next year, up slightly from the current year. The Fitch Ratings agency has forecast that Kuwait will report a fiscal surplus of 1.9 percent of gross domestic product (GDP) for the current year, up from 0.2 percent last year.
On Thursday U.S. crude futures gained 0.1 percent to $64.79 per barrel. The budget for its current year was based on an average oil price of $45 a barrel, but as Kuwait has the lowest fiscal breakeven oil price of $50, the rising oil price means good news for the Gulf state.  However, this means there is no incentive on the Kuwait government to push ahead with its economic reforms and introduce new revenue streams such as value-added tax.