Kuwait considers new fees for public facilities and services

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KUWAIT CITY, Sept 19: The Minister of Finance Fahad Al-Jarallah says the state is moving to impose new fees for the use of public facilities and services within the framework of starting to implement the projects included in the government’s work program, with emphasis on the relevant government agencies in the event of pricing their services on the existence of the appropriate legal tool to impose fees.

He stressed that each entity is responsible for what concerns it in accordance with the laws of its establishment, and in a manner that does not conflict with law No. 79/1995 regarding the fees for the use of public facilities and services.

In response to a parliamentary question submitted by MP Muhalhal Al-Mudhaf, Al-Jarallah explained that the government’s work program for the 17th legislative term and within the first axis “Public Finance Stability” included a program to increase and develop state revenues. The program has three projects, which are launching a pricing mechanism for public services, the fees, and the violations (developed and renewed periodically), and issuing a general framework for reviewing and re-pricing the state’s real estate properties on a periodic basis that takes into account the principles of justice and productivity rates.

The intention is to reconsider the current fees. The reasons go back to what was previously explained in the first paragraph above, that the government’s work program includes the first axis of “stability of public finances” to increase and diversify state revenues with the aim of reforming the financial structure for the general public.

The Ministry of Finance has directed all government agencies to study and reconsider the fees imposed by each agency in accordance with the laws of its establishment and in a manner that does not conflict with law No. 79/1995 regarding fees and financial costs, and in exchange for the use of public facilities and services.

Al-Jarallah said, “The Ministry of Finance is currently reconsidering ministerial resolution No. 40/2016 regarding issuing a list of fees for the use of private real estate state properties and service fees.”

In response to another question by Al-Mudhaf, Al-Jarallah explained that the Public Institution for Social Security does not charge fees for the services it provides, other than what is stipulated in article 95 of the Social Security Law issued by the Amiri Decree Law No. 61/1976.

This includes the fees for issuing the certificate indicating the payment of the subscription to the institution amounting to KD 0.500 for each certificate or taken from it. The government agencies responsible for issuing specific licenses or certificates must condition the issuance of these licenses or certificates or their renewal on the applicant’s submission of the aforementioned certificate or an extract thereof.

Imposing any increase or establishing a new fee requires a legislative amendment, and the institution has no intention of doing so.

In response to the question about the Amiri directives from the political leadership regarding granting retirees percentages of the institution’s profits, and whether a portion of the institution’s profits will be distributed to retirees, Al-Jarallah said, “Based on the noble desire, a grant was decided for retirees and those entitled to receive their effective shares at the rate of KD 3,000 by law No. 4/2022. The right to increase pensions on an annual basis by KD 20 was decided as of August 1, 2023, as the scheduled increase was KD 30″.

He further explained that the social security laws included provisions requiring the establishment of funds, and precisely defined the sources of each fund and the methods of disbursing from it. They obligated the institution to implement the provisions of those laws, which means that the money of those funds should not be disposed of except in accordance with the provisions of the laws regulating them.

This also takes into account that investment returns are considered a resource from the funds’ resources in accordance with the social security laws, and are allocated to finance funds based on the disbursement of pension rights to ensure their permanence and the continuation of performing the rights established pursuant to them, and that they may not be disposed of other than for the purposes prescribed by law.

Al-Jarallah stressed that there is no legal objection in the Social Security Law to giving grants to the beneficiaries of its provisions if it becomes clear that there is excess money in the funds after the approval of the institution’s Board of Directors, but this is not achieved at the present time because there is a realistic obstacle, which is the actuarial deficit.

The actuarial tests conducted in 2019 confirmed the existence of a deficit in the Chapter Three Pension Fund for old-age, disability, sickness, and death insurance for workers employed by others or those of the same rank and the Military Retirement Pensions and Benefits Fund, as both of them suffer from an actuarial deficit at the present time.

The reasons for this are in fact due to the repeated amendments and changing laws that would lead to a lack of clarity in the future vision of the financial situation of the funds and the benefits expected to be provided, in addition to the failure of the public treasury to pay its share of the contributions for the insured and the beneficiaries. They also include not achieving the required return on investment over the past decades, taking into account the insufficient contributions in themselves to finance the retirement pension and the rights associated with it, as there is no consistency between the total contributions paid for each insured person and the total of the rights that may be due to him.

The minister warned that the decision to disburse periodic grants or any trend toward that may affect the technical foundations of the system and may lead to undesirable effects in the coming years.

On the other hand, Al-Jarallah confirmed that the Central Bank of Kuwait performed its assigned role in the “Malaysian Fund” case in accordance with Article 14 of law No. 106/2013 regarding combating money laundering, by conducting inspection missions on banks before the case appeared in the media to ensure their compliance to fulfill its responsibilities in accordance with the requirements of the provisions of the law, which indicate that banks take the necessary measures without delay.

Al-Jarallah noted that article 16 of the same law, which was issued instead of law No. 35/2002, stipulated that a unit called the Financial Investigation Unit be established, which will have an independent legal personality and not be affiliated with the Central Bank. The unit is also specialized in receiving notifications about suspicious transactions by financial institutions, including banks and non-financial businesses and professions, and requesting information related to what is suspected to be proceeds from a crime or money linked to money laundering and terrorist financing operations.

He explained that the Central Bank of Kuwait carried out its role through close supervision, and was reassured that the concerned banks performed the role assigned to them in accordance with the law, and continued the role assigned to it by law through its continuous and close supervision of the entities subject to its supervision.

In the event that the Central Bank of Kuwait has information or transactions that may be related to money laundering, terrorist financing, or predicate crimes, it will not hesitate to inform the Kuwaiti Financial Investigation Unit about them immediately in implementation of clause No. 7 of Article No. 14 of the aforementioned law.

By Abdul Rahman Al-Shammari
Al-Seyassah Staff

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