During the last session of its current term, the National Assembly passed the state’s annual budget, which foresees a deficit of KD8.2 billion for the financial year (FY) 2019-2020.
In a press statement released on the budget, Finance Minister Nayef Al-Hajraf said he reviewed the state’s financial status with lawmakers, in line with the article 150 of the constitution, and discussed with them the state’s assets and liabilities for the FY 2019-2020.
Revenues in the budget, which began on April 1, are projected at KD15.8 billion, most of them from oil, while spending is estimated at KD22.5 billion, over two-thirds of which are for wages and subsidies for public sector employees. Oil income, which forms nearly 88 percent of total public revenues, is projected at KD13.85 billion, and is calculated based on a modest $55 a barrel.
According to Kuwaiti law, 10 percent is deducted from revenues every year regardless of whether there is surplus or deficit in favor of the Kuwait Fund for Future Generations (FGF). With this year’s contribution at KD1.58 billion, the total deficit of the public budget moved to KD8.2 billion, Minister Al-Hajraf stressed on the strength and development of the FGF’s assets, describing the average revenues of 10 years in the fund as “the best” compared with its counterparts.
He also highlighted the importance of differentiating between the goal and performance of the FGF, the State’s sovereign investment fund, and the State’s treasury, the General Reserve Fund (GRF).
Admitting that the treasury (GRF) fund is facing risks of liquidity, he called on lawmakers to consider all means necessary to address such risks and enhance liquidity of the GRF. The minister also called for implementing several reform measures aimed at addressing and controlling the waste in government spending, and to adjust structural imbalances in the state’s public finance.
The financial status of the country was discussed in a closed session as demanded by the government to provide MPs with information about the performance of Kuwait’s assets abroad. At the end of the debate, speaker Marzouq Al-Ghanem said it was decided to refer the issue to the Audit Bureau.
Warning that the country is faced with major challenges, lawmaker Adnan Abdulsamad, who heads the budgets committee, pointed out that even if the government imposes taxes and raises charges on public services, it will not be able to bridge the budget shortfall. During the debate on the budget, many MPs called on the government to stop squandering public funds and to employ more Kuwaitis.
The persistent budget deficit comes after 16 years of surpluses during which Kuwait built assets worth over $600 billion managed by Kuwait Investment Authority (KIA), mostly outside the country. Incidentally, the returns from these investments are not included in the state’s annual budget.
The fifth consecutive deficit budget was approved by parliament on a day which also witnessed the finance minister winning a vote of confidence from the assembly by a 36:20 vote margin. The minister had been subjected to intense grilling last week by some parliamentarians who accused him of, among others, failing to abolish interest on loans taken by pensioners from the social security agency.
Following the renewal of confidence in the finance minister, Hajraf thanked the Assembly and said he will continue to serve the country and the people. But he warned against what he called a “deviation” in the debate of grillings, which could undermine democracy. His Highness the Prime Minister was among the first to congratulate him on winning the vote of confidence.
His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah sent a cable of congratulations to the finance minister on winning renewed confidence from the assembly. His Highness the Crown Prince Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah also sent a similar cable to Al-Hajraf, and wished everyone success in serving the dear nation under the leadership of His Highness the Amir. At the end of the session, Speaker Al-Ghanem closed the current term of the assembly until the end of October.
– The Times Report
Read Today's News TODAY... on our Telegram Channel click here to join and receive all the latest updates t.me/thetimeskuwait
