KUWAIT CITY, March 24: Representatives of various economic agencies have recommended increasing public spending in order to boost the economy and activate the role of the private sector in economic activities, says Chairman of the parliamentary Financial and Economic Affairs Committee MP Faisal Al-Shaye.
Al-Shaye made the statement after the committee meeting Thursday when they discussed the current economic situation with Minister of Finance and acting Minister of Oil Anas Al-Saleh, Minister of Social Affairs and Labor and State Minister for Planning and Development Hind Al-Subaih, Minister of Commerce and Industry Dr Yusuf Ali, Minister of Electricity and Water Ahmed Al-Jassar, as well as representatives of Kuwait Chamber of Commerce and Industry (KCCI), Kuwait Economic Society, Accountants Society, Banks Union, Union of Investment Companies and several other experts in the field.
He revealed all those who attended the meeting affirmed their support for the economic reform document which consists of the following points: financial reform, redefining the State’s role in the national economy, activate the role of the private sector in economic activities, participation of citizens in the ownership of enterprises, development of the labor market and civil service system, legislative and institutional reforms, and support procedures.
He added the government confirmed its readiness to work towards economic reform, indicating the committee will try on Sunday to complete its final report regarding the document and its recommendations which will be submitted to the National Assembly for discussion on Tuesday.
Asked about updates on the proposed electricity and water charges based on consumption, Al-Shaye disclosed the government will submit a draft law in this regard to the committee on Sunday. He said the committee will deliberate on the draft law and other related proposals on the same day.
Kuwait plans to introduce sales tax in January 2018 in coordination with the Gulf Cooperation Council member states, says Gulf Business News quoting a senior government official. The move is expected to help the country diversify and boost income following the fall in oil revenues.
“All of us (the Gulf Cooperation Council countries) have decided to go for January 2018, although this has to pass through the National Assembly so it may take time,” Deputy Prime Minister, Finance Minister and acting Oil Minister Anas Al-Saleh was quoted as saying at the recent MEED conference. Kuwait may also look to cut subsidies in a bid to reduce spending, he added.
He went on to say, about 70 per cent of Kuwait government subsidies go to electricity and gasoline and the government is now keen to discuss the issue with the National Assembly. The minister also asserted that Kuwait will continue to move forward with its infrastructure projects despite the decline in oil prices. “We will continue to spend on our infrastructure projects, as planned.
We have never seen such high levels of capital expenditure (despite low oil prices). “We are focusing on infrastructure projects that work best and avoiding falling into the trap of economic stagnation because Kuwait’s economy depends on government expenditure. We are on full throttle and not holding back,” he added. Last year alone, Kuwait has awarded contracts worth $31 billion according to MEED Projects. It has also about $150 billion worth of planned projects in the pipeline.
Al-Saleh added, any potential spending defi cit could be covered by tapping into Kuwait’s financial reserves and going to the bond market. “We are building our debt management strategy, and we have everything on the table. We can use financial reserves from the good years mixed with issuing some sovereign bonds in the local and international markets.” Capital markets will also be used, he added.
Al Saleh also stressed that Kuwait would remain focused on boosting public- private partnerships. Even if oil prices returned to levels above $100 a barrel, the state was committed to expanding private sector participation in the local projects market, he said. Kuwait’s KD 6 billion ($19.9 billion) PPP (public-private partnership) program is being overseen by the Kuwait Authority for Partnership Projects.
Under the state’s PPP law, project companies should hold an initial public offering after their selection on a PPP project. Al Saleh said this was a good way of spreading the benefits of private sector project participation to the local population.
Meanwhile, MP Ahmed Lari suggested allowing Bedoun students with a grade of 90 percent or above in Science to specialize in Physics at Kuwait University in order to address the shortage of teachers for this subject. He clarified that the low number of students taking up Physics and the lack of Kuwaiti Physics teachers have prompted him to present the proposal
By Abubakar A. Ibrahim Arab Times Staff and Agencies