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Setback may have negative impact on economic performance
KUWAIT CITY, May 12: Economic sources say they fear the delay in approving the new budget may have negative impact on the economic performance, especially since most development projects in the country have slowed down in terms of their implementation since before the outbreak of the Covid-19 pandemic due to the deficits that have accompanied the country’s budget since fiscal 2014-2015 until the repercussions imposed by the epidemic, reports Al- Qabas daily.
Although the recovery budget continues following the rise in oil prices the delay in approving the budget and political disruption major projects expected to be implemented will suffer due to the rapid changes that have occurred at the global economic level accompanied by rising inflation supply chain disruptions, as well as the ongoing repercussions of the Russian-Ukrainian war.
All of these factors will undoubtedly increase the cost of implementing projects by tens of millions of dinars if not hundreds of millions, in addition to time and more opportunities wasted. The sources indicated that the slow pace of development in the country will have wide-ranging repercussions at several levels and sectors. Sources confirmed that the delay in launching government projects will lead to an increase in their cost due to the rise in inflationary pressures, both in terms of the raw materials needed to complete these projects.
This is in addition to the fact that many companies and contractors rely on bank finances to provide the necessary liquidity, and after the high cost of loans in terms of interests there is no doubt that companies will demand an increase in the value of contracts for pending projects, both current and future, and this requires expediting the approval of the general budget so that government agencies can complete the contracting procedures for their projects. It is a well-known fact that development projects in Kuwait suffer from several difficulties and as a result contractors failed to deliver of time.
This is in some way tied to the delay in approving the new budget project, which is seen as one of the major reason for the disruption of the progress of government and consequent failure to meet the stipulated dates which can be summed up as time wasted, opportunities wasted. Although the Ministry of Finance emphasized in its circular that the supervisory authorities should give priority to the projects of the annual development plan, provided that the completion of their procedures is expedited.
Most of the contractors working in the fields of building and construction suffer from the problems of high prices, supply chains and shortage of labor, and sources in the sector confirmed that there are continuous meetings between the major contracting companies to discuss realistic and practical solutions that ensure the continuation of the implementation of projects after approving the budget and addressing the financial and logistical obstacles that have arisen since the cost increases with time. Many government agencies wish to undertake projects that contribute to the development of their business and help them in providing digital and modern technological services, but the delay in the completion of these projects is an obstacle to the government development process.