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Expats in Kuwait could lose subsidies

Officials in the Kuwait Parliament are debating whether subsidies on petrol should be lifted for expatriates, meaning they would pay more than citizens of the nation for fuel.

Further to this, proposals have also been submitted to see a reduction in the subsidies they receive on electricity in a similar move.

The move, which is yet to be decided, has mixed support from MPs, with many suggesting that more analysis be carried out before a conclusion is reached.

Both commodities are highly subsidised in the country, helping to make the cost of living affordable, but the expanding population, partly due to an influx of expats is increasing the bill for the government.

Some politicians fear that should expats lose their subsidies or at least some of them, then a black market in goods would be created to obtain the commodities.

Abdullah Al Tamimi, a Kuwaiti MP, has argued that by cutting subsidies to the 2.8 million expats living in the country, hundreds of millions of dollars could be saved, the Arab Times reports.

A fringe benefit on removing subsidies from petrol would likely be fewer cars on the road and less traffic congestion – a problem that has been blighting Kuwait's major cities.

To understand the amount that subsidies are worth, it is necessary to understand that the Kuwaiti dinar is subdivided into 1,000 fils.

The country spends 47 fils on producing one kilowatt of electricity, but this is sold to costumers for two fils, meaning the government is making a huge loss on it.

If subsidies were lifted for expats they could expect their annual electricity bill to rise by 22 times, meaning instead of paying KD25 (£53) they would face charges of KD550 (£1,162).

At present, most expats pay for their electricity as part of their rental contract, but if subsidies are removed it is likely to be charged separately.

The difference for petrol would not be so extreme, but without subsidies, fuel would be three times its current price.

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