Technical panel for privatization said to study priorities
KUWAIT CITY, Aug 9: The Cabinet has approved a draft law which allows the government to take loans of up to KD 25 billion for a period not exceeding 30 years from local or foreign bodies quoting informed sources.
They said the reason for preparing this draft law is the nearing of the end of the grace period offered to the government by the previous law in September 2017. The sources explained that recent discussions in this regard concluded with increasing the limit by KD 10 billion compared to the limit stated in the current law.
This will enable various official bodies, either the Central Bank of Kuwait or the Public Loan Committee, to cover the expected budget deficit in the coming years. They indicated that the recent process for issuance of bonds by Ministry of Finance was in line with the law that allows the government to obtain loans of up to KD 10 billion.
The sources went on to explain that the law aims at curbing the exhaustion of foreign currency available to the state and reducing the need for Ministry of Finance to change the foreign currency to the local one. Kuwait managed to issue the first loan bond for $8 billion in the international loan market with the aim of diversifying the sources for financing the public bud get.
This action was taken after Ministry of Finance received recommendations from an international chancellor concerning the future of the assets of the Public Reserve Fund until 2025 based on the incomes and expenditures of the government. It was discovered that Kuwait might face a budget deficit every year for the coming ten years.
The maximum annual deficit will be about KD 8 billion. So this has to be taken into consideration when the draft law on the assets and loans are prepared in order to cover the budget deficit or part of it by obtaining loans from local or international markets. Meanwhile, financial sources warned against passing the bill on an urgent basis.
They stressed that the grace period stated by the current law ends before the coming parliamentary term starts, which means the government will decide to either withdraw from the public reserve or issue a decree of necessity. Meanwhile the provisions submitted to the Cabinet concerning privatization are nothing but preliminary studies on some of the governmental assets which the competent authorities are considering to prioritize for privatization, reports Al-Anba daily quoting sources.
They said the Cabinet has assigned the technical committee for the privatization program to study all the priorities presented, and then submit a report on the results of the study to the Cabinet for taking necessary decision.
The sources affirmed the determination of the Cabinet to take legal measures for privatizing some government facilities. Regarding the facilities considered by competent authorities to be priority for privatization, the sources indicated that some authorities believe cooperative societies should be included.
They said, “If a decision is issued to privatize cooperative societies, it will only be done gradually such that a limited number of cooperative societies will be privatized and the results will be evaluated thereafter. The sources indicated that the privatization scenarios that may be limited only to studies without being included in the decision for privatization include part of the Al-Zour Refinery of the Petrochemical Complex and the North Shuaiba Plant, adding, “For the North Shuaiba Plant, the assets of the state will be evaluated fairly, and then the privatization process will proceed”.
Meanwhile, in response to a parliamentary question presented by MP Shuaib Al-Muwaizri, Kuwait Investment Authority (KIA) revealed that the net profit reserves of the fiscal years from March 2014 to March 2017 reached KD32 billion, reports Al-Qabas daily. When asked about the people entitled to the financial withdrawal and transfer, KIA said minister of finance, in line with the bylaws, gives the authority to the managing director to define the responsibilities for financial withdrawal and transfer from the bank accounts.