Kuwait parliament Wednesday passed the 2015/2016 state budget which projects a 7.0-billion dinar ($23.2 billion) deficit due to the sharp drop in oil prices.
Forty-seven MPs voted for the budget which projects revenues at 12.2 billion dinars ($40.7 billion), a massive 39.2 percent drop from last year's estimates. Four members opposed the budget.
Spending is projected at 19.17 billion dinars ($63.9 billion), 17.4 percent lower than last year's estimates.
"We are facing a very difficult financial situation. We must control the growth in spending and diversify our sources of income so as not to remain completely reliant on oil," Finance Minister Anas al-Saleh told parliament.
Oil income, which normally contributes over 90 percent of total public revenues, dropped sharply by 42.8 percent and is estimated at 10.76 billion dinars ($38.8 billion).
The minister said that the budget deficit is likely to continue in the near future as long as oil prices remain low.
International oil prices slumped by 60 percent from June last year to January before recovering part of the losses.
The head of parliament's budgets committee, MP Adnan Abdulsamad, said the cut in spending did not affect wages, public services and the country's development plan.
Kuwait posted a budget surplus in each of the past 16 fiscal years due to high oil prices, compiling hundreds of billions of dollars.
Oil income in the new budget is calculated on the basis of $45 a barrel, down from last year's $75 a barrel, while the country's average production is projected at 2.7 million barrels per day.
Abdulsamad said Kuwait will post a budget deficit as long as oil prices remain below $77 a barrel.
Sustained surpluses since 2000 have boosted fiscal reserves of the Gulf state's sovereign wealth fund to around $550 billion, according to unofficial estimates.