His Highness the Amir urged the cabinet and parliament on Tuesday to cut state spending in response to slumping oil prices, warning that any delay would increase the damage to the government's finances.
The remarks by Sheikh Sabah Al Ahmed Al Sabah, in a speech to parliament, appeared to be an effort to prepare the ground for politically difficult economic measures such as cuts in energy and food price subsidies, which could occur next year.
"Oil prices have caused state income to drop 60 percent, but public spending has not been cut, causing a state budget deficit which is a burden on our development aspirations," he said.
He asked the cabinet and parliament to adopt "urgent reform measures" that would include spending reductions and efforts to find non-oil sources of income.
Kuwait posted a budget deficit of 1.094 billion dinars ($3.6 billion) in the five months through August 31, after a payment into the Future Generations Fund, which is part of its sovereign wealth fund, official data shows.
That amount is small compared to the country's huge fiscal reserves, and Kuwait is better able to cope with cheap oil than most of the Gulf Arab oil exporters. Nevertheless, officials say the plunge of oil prices means the country must go ahead with long-delayed fiscal reforms.
A range of subsidy cuts is under consideration - local media reported this week that domestic gasoline prices might almost double, though they would remain among the lowest in the world - and the government has said it plans eventually to impose corporate tax on local firms.
Such changes could arouse complaints among the public and in parliament, which has often had tense relations with the cabinet which have slowed or blocked economic reforms. Kuwait's parliament is the most independent and assertive among the Gulf monarchies.
Sheikh Sabah said he did not want Kuwait to run down its Future Generations Fund. Including this and other assets, the sovereign wealth fund is estimated to be more than $500 billion in size.