Diversifying non-oil revenue
Prohibitive 1995 law abolished
Cabinet approval now needed
Kuwait’s strategy to diversify its non-oil revenue by hiking government services fees is reportedly forecast to generate nearly KD500 million ($1.6 billion) a year for the Gulf state.
Government offices have a tendency to “re-price” services they offer to the public, following an Emiri decree in early 2025 allowing them to revise such fees, local Kuwait media reported on Wednesday.
The Finance Ministry has prepared estimates on the revenues expected to be generated from the planned increase in public services fees.
“The estimates expect the new services fees to generate around KD500 million for the state coffers annually,” the Arabic language daily Al-Rai reported, quoting informed government sources.
On January 19, a decree by the Gulf country’s Emir allowed ministries to increase charges for public services, which had remained unchanged for the past three decades.
Proposed by the government, the decree abolished a 1995 legislation passed by the National Assembly (parliament) prohibiting the government from raising charges for public services without the prior approval of lawmakers.
The abolition of that legislation gives a free hand to authorities to re-price charges of public services, but after obtaining the approval of the Cabinet.
Public services include electricity, water, communications, health, visa, and other services offered to the public, mainly to the dominant expatriate community.
The decree stated that “the competent authority in each government body will determine fees and charges of public services and utilities in accordance with the laws regulating them and after the approval of the Council of Ministers”.
Around 44 percent of Kuwait’s GDP comes from the oil and gas sectors. The country’s government has been implementing reforms intended to increase non-oil revenue to shore up a persistent budget deficit caused by rising spending and volatile oil export earnings.
The Gulf state expects to generate nearly $825 million from a planned 15 percent tax on multi-national entities operating in Kuwait. An annual income of nearly $660 million is also expected to be generated from an IMF-proposed sin tax.
The fiscal gap has also prompted Kuwait to revive a defunct debt law allowing it to borrow up to $99 billion over a period of 50 years despite the country’s massive overseas assets held by its SWF, estimated at more than $one trillion.
