Kuwait's state budget for next fiscal year envisages a spending increase of about 13 percent from the current year's plan, state news agency KUNA reported on Monday as the oil-rich state grappled with a wave of industrial unrest.
State-run Kuwait Airways staff are striking over pay demands and the national carrier was forced to cancel some flights for a third day on Monday. Customs workers started a walkout last week over pay.
The budget for the 2012/2013 fiscal year, which starts on April 1, is expected to total around KWD22 billion dinars (USD$79 billion), KUNA quoted the head of parliament's budget committee as saying.
That estimate assumes revenues of around KWD14 billion dinars, KWD12.8 billion of which would come from oil, Adnan Abdulsamad said. The projection is based on an oil price of USD$65 a barrel, KUNA added.
Although the plan assumes a budget deficit, global oil prices are currently trading well above USD$100, so Kuwait could well post a surplus next fiscal year. For the first nine months of its 2011/12 fiscal year, the government recorded a budget surplus of KWD13.2 billion dinars.
State finances could come under pressure from wage increases granted because of the industrial unrest, which is partly due to increased union activity since last year's Arab Spring uprisings in the region, and follows a snap election last month which saw the Islamist-led opposition win control of Kuwait's parliament.
"What is happening in Kuwait is beyond a state of chaos," the Kuwait Times wrote in a front-page opinion piece. "This time the government has to watch its steps very carefully and take urgent action."
According to next fiscal year's budget plan, wages for state employees would rise 7 percent. However, the government approved a 25 percent rise in pay for civil servants on Sunday and Abdulsamad told the al-Watan daily that the new increase had not been included in the budget plan.
Some unions remain dissatisfied with the promised 25 percent pay increase, arguing that the cost of living is rising -- the average inflation rate climbed to a three-year high of 4.8 percent in 2011 -- and that wage increases at management levels are not reflected lower down the pay scale.
Government policymakers and economists say that while Kuwait can afford high pay increases in the short term, thanks to high oil prices, it risks longer-term trouble if wages keep rising and oil prices fall back.