Middle East

Kuwaitis face cuts in lavish benefits as oil prices drop

A Kuwaiti trader follows the stock market activity at the Kuwait Stock Exchange (KSE) on 31 December 2015 in Kuwait City Image copyright AFP
Image caption Kuwait needs to make budget cuts to cope with declining revenues due to lower oil prices

Sitting on the world's sixth largest proven oil reserves, Kuwait's 1.3m citizens are accustomed to lavish benefits, such as interest-free housing loans, free education and healthcare, and food and fuel subsidies.

But like other Gulf states, the sharp fall in global oil prices has forced the country to consider whether these benefits are luxuries it can no longer afford.

Last month, Parliament Speaker Marzouq al-Ghanim warned that continuing to spend in the same way would be "economic suicide".

"We cannot lie to the Kuwaiti people, we cannot come here and say we will protect your pockets and the citizen will not be affected," he said. "Everyone's pockets will be affected... This is the reality."

In January, the Emir Sheikh Sabah al-Sabah spoke of the need for better management of spending and for budget cuts to cope with declining revenues

However, an attempt by the government to remove subsidies on diesel and kerosene last year was heavily criticised by MPs.

Image copyright Getty Images
Image caption Acting Finance Minister Anas al-Saleh hopes the corporation tax will help cut Kuwait's deficit

The pressure led to the subsidies being restored, although it was decided that they would be reviewed monthly in accordance with global price fluctuations.

The acting Finance Minister, Anas al-Saleh, also announced this month that the cabinet had approved a plan to impose a 10% tax on corporate profits, as one of a number of measures aimed at reducing Kuwait's budget deficit, projected to be 8.18bn dinars ($27.1bn; £19.2bn) for this financial year.

In addition, some state-owned projects, including airports, ports and some facilities of the Kuwait Petroleum Corporation (KPC), would be privatised, Mr Saleh said.

Kuwaiti lawyer Mishari al-Sawwagh feels that the government's priorities in implementing such measures are misplaced.

"Our problem in Kuwait is not about money... it's about leadership and management," he told the BBC.

Mr Sawwagh believes cutting subsidies will not only hit Kuwaiti citizens but also the 2.9 million-strong foreign workforce on which they depend.

"Lifting petrol subsidies, for example, will affect foreign workers who may consider leaving as they can no longer afford the living costs here, and this will also affect our economy," he said.

'Medical tourism'

One area of public spending that has come under scrutiny is healthcare.

At present, thousands of Kuwaitis are sent each year to the US, Europe and elsewhere for medical treatment.

However, many say the system has been abused by people claiming to be suffering from medical conditions in order to spend months abroad at the state's expense.

In 2014, the government spent 441m dinars ($1.46bn; £1.04bn) on funding some 11,000 medical trips abroad, according to figures from the State Audit Bureau.

To reduce the numbers of so-called "medical tourists", the government announced plans to reduce the daily allowances given to patients and their companions.

Image copyright AFP
Image caption Kuwaiti MPs want the government to crack down on medical tourism

But MPs have called on the government to review its decision and instead focus on ensuring that only those in need of specialist treatment are sent abroad.

Ahmed Baqer al-Ali, a Kuwaiti doctor doing postgraduate training in plastic surgery in London, believes the popularity of medical tourism is a result of a number of problems with Kuwait's healthcare system.

"A lot of patients do not trust the health system," he told the BBC. "We find people travelling for treatment for chronic conditions such as diabetes and back pain, which can be successfully treated in Kuwait."

"The government should take tough steps to resolve this issue. But it's not just about reducing the amount - it's about the whole concept."

In addition to improved assessment of those seeking treatment abroad, Dr Ali believes that money needs to be spent on building world-class medical institutions in Kuwait.

He points out that this is already happening in the UAE, with Abu Dhabi opening branches of the Cleveland Clinic and King's College Hospital, while Dubai attracted an estimated 500,000 medical tourists in 2015.

Image copyright Getty Images
Image caption Most Kuwaitis diagnosed with cancer are currently treated abroad

Dr Ali says this kind of long-term vision would not only improve the healthcare available to Kuwait's population, but also provide much-needed training positions for local doctors, whose development is being hindered by the practice of exporting patients.

Most Kuwaitis diagnosed with cancer are currently treated abroad, for example.

"This is a disaster because we have plenty of local oncologists who have been trained abroad, and many in the new generation of doctors want to specialise in oncology, but they have no exposure to cases," Dr Ali said.

"It's not about the quality of doctors here; we are trained at the best centres in the world."

"The problems are management issues and the lack of infrastructure. There's no quick solution, but this is what the government needs to solve."

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