Removal of expatriates’ subsidies may lead to ‘black market’ - MPs

The news about government study to remove expatriates’ access to subsidies and rationalize subsidies for Kuwaitis garnered mixed reaction from MPs who reiterated the need for reducing spending, but at the same time demanded further studies to avoid inflation and other negative effects that such a decision might bring.

According to local Al-Rai Arabic news paper, the majority of lawmakers were against the idea of removing subsidies completely from services provided to expatriates. “Removing subsidies will leave a negative impact on expatriates given their limited salaries,” Al-Rai daily quoting MP Abdurrahman Al-Jeeran reported. The humanitarian side must be kept in consideration during discussion of removing subsidies, he added.

MP Abdullah Al-Tamimi, who last month proposed a bill to cut the expatriate population by more than half, said on the other hand that cutting subsidies on services provided to non-Kuwaitis will help ‘save millions’ of dinars annually.

Meanwhile, Arab Times daily reported that a ministerial committee was earlier formed to study the proposal of revising the subsidization structure. According to the report, the proposal suggested removing fuel subsidies for expatriates and cutting electricity subsidies such that they pay market price for most of their power consumption. They explained that the structure of subsidization for Kuwaiti citizens will be modified based on the results of a study or questionnaire that will be conducted to identify their monthly power consumption.

Eliminating subsidies on petrol could lead to creating a black market for fuel in Kuwait, Kuwait Times daily reported. “Some Kuwaitis might buy large amounts of petrol, then sell it to expatriates on the black market,” daily reported quoting some source.

According to report if an expatriate who pays KD 25 per year for electricity consumption will end up paying KD 550 if the electricity subsidization is removed.