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Features of Kuwait’s budget for 2023-2024 said largest
KUWAIT CITY, Feb 5: In a quick reading of the features of the State of Kuwait’s budget for 2023-2024, which is the largest in the country’s history, it is noted that investment spending allocations, on which the private sector depends almost entirely, decreased by 15.2% to 2.4 billion dinars, compared to 2.9 billion dinars in the previous year, reports Al-Qabas daily. The daily added, the budget for the previous year was one billion dinars and 2.6 billion dinars in 2021-2022, making it the lowest in 3 years. The capital expenditures allocated for the fiscal year 2023-2024 are also the second lowest since the fiscal year 2017-2018, which recorded the largest deficit in Kuwait’s budget, since entering the era of deficits as a result of the decline in oil prices in 2014.
Although the budget submitted by the Ministry of Finance to the National Assembly for discussion and approval, includes expenses amounting to 26.2 billion dinars, the salary item and the like amounted to 14.9 billion dinars, compared to 13.1 billion in the previous year, an increase of 13.3%, to be distributed 80% of the expenses for salaries and subsidies, 9% for capital expenditures, and 11% for the rest of the expenses.
At a time when the world is hedging fears of recession as a result of the successive increases in interest rates, instead of the government increasing investment spending to increase the rate of economic growth, it has reduced it, and if we add to that the consequences of the annual government deficit in spending the estimated amounts of investment spending.
As a result of bureaucracy and red tape, the private sector will face a major dilemma, with the decline in spending on huge projects expected to be implemented. On the other hand, citizens’ hopes for quick solutions to chronic problems in the service sector, roads, health, education, and other sectors through the launch of major projects capable of changing the face of reality and catching up with the development experienced by neighboring countries, may go unheeded.
It must be taken into account that the lean years that the budget went through prompted the government in the past years to reduce investment spending, postpone many construction projects, stop development and housing projects, and infrastructure projects that were planned to be implemented, which had many negative repercussions on the local economy. The figures for the budget for the new fiscal 2023-2024 show the continued tyranny of current spending in terms of salaries, subsidies, and so on at the expense of investment spending, which led to an imbalance in the expenditure item in the budget and the government’s inability to increase the non-oil revenue item, which is directly related to the volume of capital spending.
These numbers add severe pressure on the private sector, which suffers from high interest rates, as a result of successive decisions to increase the discount rate on the Kuwaiti dinar, to keep pace with the US Federal Reserve, which means a scarcity of projects and a high cost of financing, which will inevitably reduce its ability to employ.