Kuwait Foreign Trade Surplus Shrinks 20%

Kuwait’s foreign trade surplus shrank 20% from a year earlier to KD1.39 billion ($4.56 billion) in the third quarter of 2016, data from the Central Statistical Bureau shows.

However, the latest figure was up from KD1.2 billion reported in the previous quarter as low oil and gas prices continue to affect the local economy, Arabian Business reported.

Kuwait is seeking to plug a budget deficit officially projected at 9.5 billion dinars ($31 billion) for the current fiscal year through March 31, after payments to the sovereign wealth fund.

Kuwait’s emir on Sunday told a new parliament that was elected partly by voters protesting against austerity policies that cutting public spending has become inevitable because of the sharp drop in oil prices.

But Kuwaitis, who are citizens of one of the world’s top oil exporting states, bristled at gasoline price hikes earlier this year, and candidates who oppose planned public sector wage restraint and other price hikes won nearly half of the seats in the 50-member National Assembly last month.

In a report last week, credit rating agency Fitch Ratings said that because of the election result, “the government may back down from more substantive initiatives such as public sector pay reform, particularly if the oil price recovery is sustained”.

“Nevertheless, it could still pursue some of its fiscal agenda with smaller, less contentious measures, for example enforcing existing subsidy rules or linking public sector bonuses to job attendance,” Fitch said.