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National Assembly Speaker Marzouq Al-Ghanim addresses the lawmakers
MPs approve record budget with deficit Assembly to resume October 29

KUWAIT CITY, July 3: The Parliament approved Thursday the Budget and Finance Committee’s report on the bill linking the budgets of ministries and government departments for financial year 2014/2015 with 49 votes in favor and two against.

The bill stipulates revenues amounting to KD 20,069,040,000 and KD 23,212,164,000 expenditures.

Oil revenues are estimated at KD 18,805,673,000 and non-oil revenues at KD 1,263,700,000 while KD 5,017,260,000 of these revenues will be allocated for the Future Generations Fund.

Meanwhile, the expenditures include salaries estimated at KD 5,086,000,000; KD 3,019,700,000 for goods and services; KD 290,327,000 for construction projects, maintenance and public acquisitions; and KD 11,399,767,000 for transfer payments and miscellaneous expenses.

On the other hand, the Parliament approved the recommendations attached to the approved general budgets as follows:

■ The government must present a clear program with figures and framework to restructure the general budgets to address deficits between current and capital expenditures.

■ Lay down a government program to restructure the Kuwaiti economy with a plan to involve the private sector in developing the national economy.

■ Activate laws which encourage the private sector to implement industrial and service projects that will generate new jobs for citizens.

Other recommendations approved in the special session include the need for the Ministry of Education to look into the situation of nutrition supervisors who have been appointed to oversee nutritionrelated activities in public schools but later lost their jobs because the companies which employed them lost their contracts.

The Parliament also endorsed the proposal to increase the electricity and water subsidies for Kuwait National Petroleum Corporation and its subsidiaries. Moreover, Finance Minister Anas Al-Saleh disclosed the State is facing many financial challenges; such as the soaring expenditures, deficit, oil and gas issues. He made the statement during his presentation on the economic, monetary and financial status of the State, as well as the budget for financial year 2014/2015.

He stressed the need to unify budget-related works in the Ministry of Finance, especially the preparation of proposed budgets in order to link the expenditure chapters and ensure accuracy of estimates. He pointed out that part of the rules and principles in drafting budgets is the preparation of a development budget to meet the needs of citizens; especially in terms of the educational, health, social and security services. He also stressed the need to provide funds for the implementation of vital projects, infrastructure and utilities.

He emphasized the importance of advising ministries, government departments, attached and independent institutions to prepare and study estimates for revenues and expenses in line with the general policies of the State, laws, decrees and decisions. He also pointed out the need to structure public finances by developing non-oil revenues and increasing the percentage of their contribution to the overall revenues while reducing expenditures.

He recommended increasing expenditures for investments and rationalizing public spending without any negative impact on the ability of government agencies to implement programs, achieve their objectives and perform their roles efficiently.

On the new budget, the minister revealed the revenues that ministries and other government departments are expected to collect within fiscal 2014/2015 are estimated at KD 20.7 billion, an increase of 10.9 percent or KD 1.97 billion compared to the estimate for financial year 2013/2014.

He said the estimated oil revenues amounted to KD 18.81 billion, an increase of 11.39 percent or KD1.92 billion compared to last year. He added the oil revenues contributed 93.71 percent to the total revenues estimated for fiscal 2014/2015 compared to 93.30 percent in 2013/2014.

He went on to say the expenses are estimated at KD 21.68 billion distributed to five chapters as follows:

Chapter One: Salaries - KD 5.586 billion which increased by 7.5 percent compared to the previous year.

Chapter Two: Goods and Services - KD 3.917 billion which increased by 1.1 percent compared to the previous year.

Chapter Three: Transportation, Equipment and Supplies - KD 389.4 million which increased by 17.63 percent compared to the previous year.

Chapter Four: Construction Projects, Maintenance and Public Acquisitions - KD 1.758 billion which increased by 20.1 percent compared to KD 2.222 billion in the previous year.

Chapter Five: Various expenses and payments (miscellaneous) - KD 10.23 billion which increased by 8.25 percent compared to KD 772 million in the previous year.

The minister revealed the budget deficit in ministries and government departments is estimated at KD 6.632 billion for fiscal 2014/2015. He hopes to achieve the political, economic and social goals mentioned in the draft budget of the State; in addition to the objectives and directives of His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al- Sabah to improve the standard of living of Kuwait’s citizens.

On the gross domestic product GDP in 2012, the minister disclosed the oil sector contributed 60.6 percent and 39.4 percent for the non-oil sector. He said the general financial statement for fiscal 2012/2013 indicated the actual general revenues reached about KD 32 billion - an increase of 5.9 percent compared to the previous year. He added the actual general expenditure in the same year increased by 13.5 percent compared to the previous year, while the surplus reached KD 12.7 billion prior to deducting the allocation for the Future Generations Fund.

According to the minister, the preliminary data on the balance of payments for 2013 shows continuation of real surplus in external balances as the current account recorded surplus of about KD 20.3 billion compared to KD 22.1 billion in 2012. He attributed the decline in the surplus to the decline of commodity balance surplus from KD 26.8 billion in 2012 to KD 25.4 billion in 2013.

On inflation, the minister pointed out the inflation declined from 3.2 percent in 2012 to 2.7 percent in 2013 and this is considered low price hike rate in general. He also quoted the International Monetary Fund (IMF) as saying that Kuwait’s GDP is expected to increase from KD51.5 billion in 2013 to KD 59.3 billion in 2019 while the inflation will remain low - an average of four percent from 2015 to 2019 and the unemployment rate will remain at 2.1 percent until 2019.

He went on to say the country’s population is expected to grow from 3.9 million in 2013 to 4.6 million in 2019, stressing the need to take into consideration the fact that the continuous population growth will put pressure on infrastructure, services and labor market.

Trade
On the global level, the minister cited the IMF report entitled, “Global Economy Prospects”, saying the global economy and international trade activities are expected to see clear improvements in the current year, wherein the growth rate in the world is expected to increase from three percent in 2013 to about 3.6 percent in 2014 and 3.9 percent in 2015. He added the developed economies are expected to grow by about 2.5 percent. On the emerging and developing economies, the minister revealed these are expected to grow by five percent in 2014.

He said the Middle East and North Africa (MENA) is expected to grow moderately from 2014 to 2015 and most of the growth will be observed in oilexporting countries where it will reach up to 5.3 percent. As for the developments in the oil market, the minister asserted the global demand for oil will increase by about 1.04 million barrels a day to reach 90.78 million barrels per day in 2014, while projections indicate an increase in production from countries outside OPEC to reach 55.3 million barrels per day this year. OPEC production is also expected to settle at 30 million barrels per day in order to maintain market equilibrium and price levels for producers and consumers.

He explained the long-term analysis of the State’s fiscal year suggests that overall revenues increased from about KD 5 billion (or the equivalent of 47.8 percent of GDP) in 2000/2001 to KD 32 billion (or the equivalent of 59 percent of GDP) in 2012 / 2013 with average growth rate of 16.2 percent. He said the average oil revenues constitute 91.8 percent of the total general revenues and at the same time, there is decrease in the rate of non-oil revenues from 15.2 percent of total general revenues in 2001/2002 to only 5.5 percent in 2011/2012.

He clarified that despite the increase in absolute terms, these developments do not guarantee stability in the State’s general revenues because the oil revenues fluctuate significantly depending on the price in the global market. On the public expenditures of the State, the minister admitted there is a trend that raises concern as public expenditures increased from KD 3.2 billion in 2000/2001 (before deducting the allocation for the Future Generations Fund) to KD 19.3 billion in 2012/2013, which is about more than six-fold in 13 years. He warned that in case of decline in the State’s general revenues, it will be difficult to reduce public spending because it is often associated with allocations which are difficult to touch like wages, salaries and subsidies.

He stressed the need for rationalization through adoption sound economic and financial principles which ensure justice for all. He also underscored the need to find ways to rationalize the current subsidies provided by the State to ensure they are given to the rightful beneficiaries, particularly those in the low-income group. Meanwhile, the hard work of MPs and sincere cooperation of the government had paid off as clearly reflected in the remarkable achievements of the Parliament over the last eight months, says National Assembly Speaker Marzouq Al-Ghanim. Al-Ghanim made the statement in the special legislative session Thursday when he delivered a speech marking the end of the current term as the Parliament starts its annual recess.

The Assembly will resume on Oct 29, 2014. The Speaker pointed out that eight months ago, the term began with the speech of HH the Amir Sheikh Sabah Al- Ahmad Al-Jaber Al-Sabah and it now ends with another speech delivered by HH the Amir a few days ago when he warned the nation about plans to spread chaos in the country’s authorities and throughout the society. He said, “Considering we were chosen by the people to represent them, we should be in the front line in terms of thwarting such plans in order to protect the Constitution and the country.” He asserted the numbers do not lie, for this Assembly was able to surpass expectations as it ratified 31 laws - the highest number of laws passed within one term since 1963. He said the Assembly submitted a total of 1,157 parliamentary queries to the governments and received responses to 877 of these queries.

He added 12 interpellation requests were submitted and 10 of which were approved while the remaining two were declared unconstitutional, indicating this is the highest number of grilling motion requests submitted in one term since 1963.

The Speaker happily highlighted the fact that the Assembly passed a number of important laws and addressed vital issues - steps which the Kuwaiti public has been waiting for years. He cited as examples the passage of bills on the Constitutional Court, housing, end-ofservice benefit (indemnity), electronic applications, Public Authority of Transportation, Environment Public Authority and other important laws. In conclusion, the Speaker thanked the MPs for their efforts and the government for their cooperation, as well as the Assembly Office and Secretariat General for their honest and unparalleled work behind the scene. Meanwhile, HH the Prime Minister Jaber Al-Mubarak expressed his gratitude to the speaker, MPs and ministers for exerting tremendous efforts to take the Kuwaiti democracy to this level. He added, “Through balanced critiques, constructive discussions and debates; we were able to reach this day of numerous achievements and we consider this a milestone.” The Secretariat General then read the end of parliamentary term decree and the Speaker adjourned the session until Oct 29, 2014.


By: Abubakar A. Ibrahim and Ahmed Al-Naqeeb Arab Times Staff

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