It also decided to raise the pay of foreigners employed by the government by 50 dinars (183 dollars), Mustafa al-Shamali said, quoted by the official KUNA news agency.

The pay hike will benefit public sector workers and Kuwaitis working in the private sector, pensioners and those receiving government aid, the minister said after an extraordinary cabinet meeting.

The increase, which will be paid starting from March, will not be added to the basic pay of employees, said Shamali, apparently in order not to overburden the state pension agency.

Average monthly salary among Kuwaiti employees is more than 1,000 dinars (3,650 dollars), but lower for expatriates. The emirate has a 3.2 million population, one million of whom are Kuwaitis.

MPs have been pressing the government to raise pay after prices of basic goods soared dramatically during the past few months with inflation cruising to a 15-year high of 7.3 percent at the end of September.

Last week, parliament debated the price rises, with some MPs claiming that the actual inflation rate was runing at as high as 12 percent.

Kuwait, which holds about 10 percent of global oil reserves, is pumping 2.5 million barrels per day and has financial assets worth more than 200 billion dollars.