‘There are no easy solutions at hand’
ALL members of the Kuwait Parliament rejected our government proposal to pull out KD five billion annually from our future generations fund (Kuwait’s sovereign wealth) which is worth about $600 billion. The purpose is to deal with the shortage in the annual deficit, something that is most likely to remain for some years to come.
The government’s proposal to withdraw from our future generations fund infuriated everybody. How dare the government come up with such an easy do-nothing solution? The public anger was provoked after the government decided to stop the annual payment of ten percent of our oil revenue into our sovereign wealth fund.
This move was made after the government decided to exchange government assets i.e., KPC and other owned shares, and other shares, for cash. For sure, Kuwait is facing shortage of cash since 2014 with the decrease in oil prices and with the increase in its expenditures annually by almost KD one billion. It did not realize or think seriously about finding long-term solutions, and instead took easy short-term solutions, which further downgraded our financial ratings, and did not take into consideration the public’s anger and total rejection.
The days of surplus cash and balanced budget are gone forever. Time has come for seriously thinking about solutions to our financial and economic difficulties. Both of these need the government to put in serious hard work for all of us. The government has to start by reducing its own expenses and coordinating well with the MPs.
However, what is most important is to bring the public to its side by being more transparent and open and convincing the public of its good intention. We must remember that no easy solution can come by introducing paper solutions or ad-hoc resolutions. Hard work, sacrifices, and hard and tough decisions are something that the government should be ready for. The time of easy money has long gone, and oil is no longer the solution.
Touching cash funds is not acceptable … it must be made clear that such funds and its contents belong to the future generations. We have our oil and must deal with it. The creator of the fund in 1953 – our late Amir Abdullah Al- Salem – made it clear that we have to be creative and use whatever natural resources, manpower and hard work that we have and are capable of. Our sovereign wealth fund does not belong to us … it belongs to the coming generations and thus should not be touched. There are no easy solutions at hand.
By Kamel Al-Harami Independent Oil Analyst