• Home
• /
• Business

Kuwait plans measures to combat soaring inflation

KUWAIT CITY - Oil-rich Kuwait plans to take a series of measures including increasing subsidies on food items to combat record inflation, the commerce minister told parliament Wednesday.

"We are considering subsidising new items, raising support for subsidised food products and reducing customs duty on imports to combat price rises," Ahmad Baqer said in a special session to discuss the increases.

Inflation in the Gulf state, which has been enjoying windfall oil revenues, hit 10.14 percent in February, according to the latest available official figures, up from 9.53 percent in the previous month.

Baqer said the government has earmarked 1.86 billion dinars (seven billion dollars) in the current budget for direct and indirect subsidies, 1.5 billion dinars (5.6 billion dollars) of it for fuel subsidies.

The emirate is also offering its one million citizens about a dozen basic food items at subsidised prices on a ration card. The 2.35 million expatriates are not included.

The minister admitted that inflation was a challenge to the wealthy emirate, saying dealing with it was a "national task."

But members of parliament blasted the government for failing to get a grip on the skyrocketing prices of a whole range of goods.

"This is the third session we have held on price rises. Prices of some products have increased five-fold and the government has done nothing," Islamist MP Daifallah Buramia complained.

"The issue should be dealt with in an unconventional way. It has reached a dangerous level and is hurting people. The middle class has been crushed," said veteran opposition MP Ahmed al-Saadun.

Independent MP Mubarak al-Waalan said that the prices of 2,200 products have increased, describing price rises as a "tsunami."

Islamist MP Faisal al-Muslim criticised the government for failing to use soaring oil income to help the people.

"Price rises in Kuwait are higher than international levels. The government is cashing in on high oil prices and the people are suffering from price rises," Muslim said.

In February, the government raised the salaries of Kuwaitis by 120 dinars (450 dollars) a month and those of expatriates in the public sector by 50 dinars (187 dollars), but MPs have been demanding more.

In May last year, Kuwait stopped pegging the dinar to the dollar and linked it to a basket of currencies but the measure failed to check rising inflation. Since then, the dinar has gained more than eight percent against the dollar.

Kuwait, which holds about 10 percent of global oil reserves, is pumping 2.5 million barrels per day. Its financial assets are estimated at well over 250 billion dollars.

AFP