One of the richest oil-producing countries is running out of money

Kuwait, one of the richest countries in the world, is facing a budget deficit due to lower energy prices. The state will not have allocated funds for the fulfillment of social obligations in two months, writes Bloomberg with reference to the country's Ministry of Finance.

Even though oil prices have partially recovered from their historic drop in March, $40 a barrel is still very low for Kuwait. The situation is aggravated by the coronavirus pandemic and the increased popularity of renewable energy sources. It's not just Kuwait that's having a hard time: Saudi Arabia is cutting benefits and raising taxes, Bahrain and Oman are borrowing and seeking support from wealthier neighbors. In Kuwait, the situation is complicated by an insoluble confrontation between the parliament and the government.

At the same time, the government has almost exhausted its liquid assets and is unable to cover the budget deficit, which in 2020 could reach $46 billion. This does not mean that Kuwait will be left completely without money, it has savings that are stored in a special Future Generations Fund - the fourth largest in the world, $550 billion. But without economic reforms, this money will last for 15-20 years, given that the fund is currently temporarily not replenished.

Unlike the diversifying Saudi Arabia, Kuwait continues to rely 90% on hydrocarbons. The public sector employs 80% of the working citizens of the country, and salaries there are higher than in the private sector. Government allowances for housing, fuel, and food can be as high as $2,000 a month for a family. Salaries and subsidies account for three-quarters of all government spending.