War losses put Kuwait budget under pressure

Kuwait's state budget is under considerable strain as the nation grapples with financial losses stemming from the ongoing "American-Israeli war against Iran." The suspension of Kuwaiti oil exports since the conflict's outset has significantly impacted revenues, with projections indicating a budget deficit of 14 to 20 percent.

Dr. Sadiq Al-Bassam, Professor and Head of the Accounting Department at Kuwait University, highlighted the substantial losses expected from the three-month halt in oil exports. He stressed the necessity of implementing economic reforms to mitigate the anticipated deficit. Despite the potential revenue decline, Al-Bassam urged the Ministry of Finance to prioritize capital spending on major projects, viewing them as crucial for bolstering future state revenues.

Al-Bassam also called for the issuance of a supplementary budget for 2026/2027 to detail the war's actual impact, especially since initial budget figures were set before the hostilities began. He emphasized the need to analyze post-war oil price projections and the consequences of the export halt on oil revenues. Furthermore, he pointed to the importance of assessing real GDP growth rates, noting that pre-war estimates for 2026 had projected a recovery between 3.8 and 3.9 percent.

To counter the war's economic fallout, Al-Bassam proposed several measures. These include offering incentives to the private sector to diversify income sources, attracting foreign capital for non-oil sectors, expanding industrial cities to boost foreign direct investment, and enhancing the Mubarak Port project to improve Kuwaiti goods export. He also underscored the need for administrative and service facilitation for small and medium enterprises (SMEs), in addition to direct financial support.

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This supplementary budget will clarify the actual impact on the current budget, the figures for which were released before the outbreak of hostilities.