The following month, Kuwait's drivers expect a huge surprise. The cost of motor fuel premium will increase by approximately 83%, as the government has decided to cancel the generous subsidies. Prices for gasoline and middle class conventional rise by 62% and 42%, respectively.
Once one of the richest countries in the Persian Gulf has taken this decision in response to a sharp decline in government revenues due to a collapse in oil prices. The governments of many countries in the region have abolished subsidies on fuel and food as well as introduced new taxes.
The United Arab Emirates became the first country in the Gulf to abolish subsidies for drivers to submit an updated market prices in the past year.
In March this year the government of Kuwait - country, most of whose income depends on oil and gas sector - approved a package of economic and financial reforms, including raising the tax on corporate profits to 10%.Increasing fuel prices have been approved by the government this month. According to Moody's estimates, after the abolition of subsidies to regular gasoline will cost 28 cents per liter, or about $ 1.06 per gallon. This is still much lower than the prices in other Gulf countries such as UAE, Oman, Bahrain and Qatar, and in less than half the cost of gasoline in the United States.
Many analysts regard this step as a test of the Government's determination to change the structure of the economy. In 2015, the rise in prices for diesel fuel and kerosene were partially suspended due to protests among residents.
"At this time, the government's ability to successfully implement plans to raise prices would indicate a willingness to promote economic reforms," - said in a research note by Moody's.
Based on materials WELTRADE