KUWAIT CITY, June 2: With geopolitical tensions in the region seemingly subsiding, many are wondering what the Ministry of Finance should do to address the financial losses resulting from the war, given the halt in Kuwaiti oil exports since the start of the American-Israeli war against Iran. In addition, Kuwait Petroleum Corporation (KPC) stated that Kuwaiti oil production will fully resume within the next three or four months, raising the question on the economic demands to mitigate the impact of the war on the State budget. Dr. Sadiq Al-Bassam, Professor and Head of the Accounting Department at Kuwait University, stated in an exclusive interview with the newspaper that he expects the current budget deficit to reach 14 to 20 percent due to the war.
He pointed out that the current economic situation in the country necessitates implementing measures and economic reforms to reduce the anticipated budget deficit. He emphasized that the losses incurred due to the three-month suspension of Kuwaiti oil exports will be substantial, leading to a decline in oil revenues — the lifeblood of Kuwait’s budget. Despite this potential decline, he stressed the need for the Ministry of Finance to focus on capital spending on major projects, as these will bolster the future State revenues. He urged the ministry to issue a supplementary budget for 2026/2027, covering all aspects related to the war.
“This supplementary budget will clarify the actual impact on the current budget, the figures for which were released before the outbreak of hostilities,” he added. He argued that this clarification is now essential, as well as studying the situation in the event of a resumption of hostilities or a final ceasefire. He underscored the importance of analyzing oil price projections in the post-war period and the impact of the halt in Kuwaiti oil exports on oil revenues. He emphasized the need to address real GDP growth rates during and after the war, especially since pre-war growth estimates for Kuwait indicated a recovery in 2026, with GDP growth projected between 3.8 percent and 3.9 percent due to increased non-oil revenues and Kuwait’s increased oil quota following the gradual lifting of the OPEC+ production cuts.
He explained that the idea of establishing an authority to transform Kuwait into a financial and commercial hub was proposed 20 years ago, taking into account the expansion of industrial cities to make them more attractive to foreign direct investment. He indicated that the Mubarak Port project will improve the export of Kuwaiti goods and products. He also pointed out that small and medium enterprises (SMEs) in Kuwait need not only direct financial support but, more importantly, greater administrative and service facilitation.
He enumerated the following measures to mitigate the war losses:
■ The government should provide the private sector with numerous incentives to contribute to diversifying income sources.
■ Attract foreign capital to help diversify non-oil revenues.
■ Provide alternative oil export routes that bypass the Strait of Hormuz to avoid wars and political crises.
■ Develop the country’s agricultural land to reduce reliance on imports and increase dependence on local products.
■ Establish a special body or committee to oversee the transformation of Kuwait into a financial and commercial hub.
■ Support SMEs as a vital tool for diversifying income sources and a key component of the economy.
By Najeh Bilal Al-Seyassah/Arab Times Staff
