Kuwait boosting rainy day fund for future generations

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A view of downtown Kuwait City.

Kuwait said on Monday it wants to raise the amount of revenue set aside in a rainy day fund to 25% from 10% in the 2012-2013 budget.

The Kuwaiti cabinet asked the finance ministry to put the change in the budget, the state news agency KUNA said in an SMS news alert.

The Future Generations Fund, a nest egg for when oil runs out, was set up in 1976 and is managed by the Gulf state’s sovereign wealth fund, the Kuwait Investment Authority and its overseas unit.

The special fund invests outside Kuwait, a major oil producer. Up to now, 10% of all state revenues, mostly from oil, were transferred to the fund on an annual basis and all investment income was reinvested.

“This order came after discussing a number of issues related to economic affairs and the situation going forward,” Finance Minster Nayef al-Hajraf said, according to KUNA.

The KIA was not immediately available for comment.

Kuwait booked a record budget surplus of 13.2 billion dinars ($47 billion) in the fiscal year that ended in March thanks to robust oil income and lower spending than planned.

A long-running political crisis has held up investment in the OPEC member, especially in large infrastructure projects, allowing the budget surplus to grow.

Despite its healthy fiscal position, Kuwait is struggling to diversify its heavily oil-reliant economy as the political row holds up investment and reforms.

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