FALLING OIL PRICES HURTING KUWAIT ECONOMY

Kuwait's ruler warned today that declines in the oil price were damaging the economy of the energy-rich Gulf state, urging lawmakers to "stop squandering resources" and to diversify revenues. "We are witnessing a new cycle of low oil prices as a result of economic and political factors that have hit the global economy and started to negatively impact our national economy," Sheikh Sabah al-Ahmad Al-Sabah said in a speech to open the new parliamentary term. The emir called on the government and parliament to "safeguard our oil and fiscal wealth". "You have the responsibility to stop squandering resources, rationalise spending and direct subsidies to reach those who need it... without impacting the standard of living," he said. He also called for stepping up plans to reduce Kuwait's dependence on oil revenues by diversifying the economy. "I have repeatedly called ... for establishing productive economic activities to create jobs for youth, diversify the resources of income of the country and reduce national economic dependence on oil," he said. Oil prices have lost more than a quarter of their value since June, hitting the state coffers of energy-dependent countries like Kuwait. Oil income accounts for about 94 per cent of Kuwaiti revenues. But the oil-rich emirate has piled up massive fiscal reserves of more than USD 500 billion during the past 15 years due to high oil prices. Earlier this month, Kuwait began reducing public subsidies, estimated at USD 18 billion, on diesel, kerosene and aviation fuel. It is considering similar measures for electricity, water and petrol. Public spending has risen more than three-fold in Kuwait over the past seven years, with the overwhelming majority of the increase going to wages and subsidies. The tiny emirate has a native population of 1.25 million and is also home to about 2.8 million foreigners.