MPs urged to present options for reforming budget
KUWAIT CITY, Aug 22: The Al- Qabas newspaper had warned several times of the imminent danger to Kuwait’s general budget and that a day will come when the government will find it hard to pay salaries of state employees, reports the daily.
Everyone blamed the media for escalating the issue inappropriately but what started as a ripple with time became a tidal wave and caught everyone unawares and dragged each individual into a real crisis.
The Al-Qabas had repeatedly warned of financial chaos due to murky government policies, waste of public money and the absence reform to remedying the budget imbalances, controlling current expenditures, especially the salaries chapter and subsidies, diversifying sources of income with new productive sectors and combating corruption.
The sources had warned of the danger of continued inflation in Chapter One, which will reach 12 billion dinars in the next draft budget, and that the government will be unable to pay salaries if it is not allowed to borrow from abroad because the fluctuation and the drop in oil prices had revealed financial mismanagement and the risk of relying on a single source of income.
“With the decline of crude oil prices, the revenues from which constituted more than 90% of the budget, the current revenues are not sufficient to cover the salaries of government employees and subsidy, leaving the government no option but to borrow, which is facing parliamentary rejection,” the sources added.
Economic sources say state budget is in dire straits due to severe financial crisis which is the result accumulated factors over the years, the most prominent of which are the following. First, the government’s control of the economy and the failure to allow the private sector to play an effective role in the economic life, since privatization is restricted and partnership projects suffer due to bureaucracy and lengthy documentary cycle; interference by the authorities when it comes to giving approvals, in addition to the lack of making land available and the absence of designated areas to establish industries.
Two, the administrative apparatus has ballooned, the government continues to employ personnel in excess and continues to form committees and department which were later proven to be unnecessary and now the government is looking for ways to do away with them or merge them with other departments citing financial and administrative burden. Add to this the reluctance to impose tax despite the steps taken by neighboring countries in this regard.
Three, is the absence of plans to diversify sources of income, and the continued dependence on oil as the main source of income in spite of the warnings otherwise; lax of accountability which has resulted in widespread corruption. Four, hike in salaries and approval given for employment under different designations which created inequality among Kuwaitis working in government and private sectors. Five, government’s hesitation to reform its system and bowing to pressures as a result of which reforms proposals collect dust in shelves.
Ali Al-Mousa, the former minister of planning, former chairman of the board of directors of the Commercial Bank said despite the difficult financial situation of the state, solutions are not impossible, but certainly they are not easy. He added, “I have confidence in the ability of the Kuwaiti government to find a way to pay the salaries of citizens and fulfill its other financial obligations, but on the other hand we have to benefit from the experiences of neighboring countries which earlier found themselves in similar situations and succeeded in overcoming them.”
He went on to say, it is true that Kuwait is facing an emergency situation, but somewhere there is a silver lining because “we still have oil which we can sell and earn money, but the problem is with the government, which has spent lavishly in the past, and it cannot continue.” He added, the government borrowing may be one of the immediate solutions, but it cannot be relied upon all the time. Former minister of public works and housing Bader Al-Hamidi said Kuwait has become the victim of political disputes between the National Assembly and the government, and that despite the government’s assertion that it is unable to provide liquidity to pay salaries during the coming period, the Public Debt Law, which is a lifeline for the budget, has been rejected.
Al-Hamidi pointed out the government’s exaggeration of the expected budget deficit for the current fiscal year, especially with the current oil prices approaching with the budget estimates, the situation remains dangerous, especially since all treatments for the financial situation are not set on sound grounds, and are issued randomly. Al-Hamidi added, Kuwait, in light of the current circumstances, needs an elaborate plan that puts everyone under national responsibility, with everyone leaving their political differences behind.
The second vice-president of the Kuwait Chamber of Commerce and Industry board of directors, Fahd Al-Jouan said international and local bodies had previously issued warnings about the danger setting in, in the state’s general budget, and its inability to continue in light of the excess of the expenditure item over revenues, and now, after years of these repeated warnings, the government has suddenly woken up and declared its inability to provide liquidity to cover the salaries of citizens during the coming period. Al-Humaidhi called on MPs to present options for reforming the budget instead of looking for electoral gains by terrorizing ministers and preventing them from opting for reforms or laws, pointing out that the political gains of some parliamentarians are at the expense of the Kuwaiti people’s interest