Economy Public wage bill cuts into infrastructure spend, Kuwait bank says By Nadim Kawach February 19, 2025, 1:11 PM Unsplash/Ahmad Mohammed Kuwait is facing structural challenges because allocations for wages and social aid account for nearly 80% of total spending, NBK says Wages, social aid 80% of budget Due to grow 9% in 2025/6 Cut of 1.7% in capital spend planned Kuwait’s government is spending too much money on wages and not enough on pressing infrastructure needs, the country’s largest bank has said. “Kuwait is still facing structural challenges in its fiscal policy because allocations for wages and social aid account for nearly 80 percent of total spending,” the National Bank of Kuwait (NBK) said. Kuwait, which relies heavily on volatile oil sales, plans to cut capital spending by around 1.7 percent in its 2025-2026 budget, due to start on April 1. Wages for Kuwait’s public servants and social aid to citizens, however, will grow 9.1 percent compared with this fiscal year’s budget. “The decline in capital expenditure represents a continuation of a downward trend in such spending over the past four years despite the pressing need for funding infrastructure projects in line with Vision 2035,” NBK said in a report this week. Kuwait turns to budget deficit as oil income drops Kuwait approves plan to tackle project delays $660m a year ‘sin tax’ target set by Kuwait Kuwait’s draft 2025-2026 budget predicts spending of 24.5 billion dinars ($80.8 billion), marginally lower than in this fiscal year. The deficit is forecast to be 6.3 billion dinars, higher than this year’s projected shortfall of 5.6 billion dinars, because of lower projected oil revenue based on an average price of $68 per barrel, down from $70 in this fiscal year. In contrast, non-oil revenue is forecast to grow by about 9 percent in the next fiscal year to a record high of around 2.9 billion dinars, NBK said. Finance ministry figures show that the increase is expected to be achieved through a rise in tax earnings, mainly from a planned 15 percent corporate tax on multi-national companies, which finance minister Noura Al-Fassam expects to fetch 250 million dinars. Kuwait’s economic indicators Kuwait’s Arabic-language daily Alqabas, citing a finance ministry document last month, said tax revenues were expected to soar by nearly 79 percent when all new taxes take effect. The International Monetary Fund in its latest Kuwait review in December said the Kuwaiti authorities “aspire to implement reforms to support the transition to a dynamic and diversified economy; to achieve this goal, a well-sequenced package of fiscal and structural reforms is needed.”
