New law eyed for borrowing

KUWAIT CITY, Sept 9: The government may seek to introduce a new law for public borrowing in the next session scheduled for October, but no specific ceiling has yet been set for the target amount, explaining that the expected law is a modified form of the old law and takes into account the observations of the MPs who had earlier rejected it, reports Annahar daily quoting reliable economic sources.

An official told the daily that the law is an imperative need to protect the state’s general reserves from depletion.

He pointed out that the existence of flexible laws appropriate for government borrowing is in place in economies of all countries in the world, even in the United States of America.

Specialists say balanced public borrowing of finance contributes to maintaining sovereign ratings, currency and state power to meet the challenges ahead.

In a related context, the official said the general reserve suffers from the withdrawal of liquidity from it repeatedly since the budget entered the deficit ‘sphere’.

He added that the assets of the Kuwaiti sovereign fund are close to $600 billion despite the crises that are going through a number of major economies around the world. The old borrowing law ended in October 2017, when the National Assembly was in recess, after which the government resigned, and the government was unable to approve the new law due to parliamentary opposition.

The deputies had earlier rejected the passage of the law, and attacked the government’s insistence that the liquidity in the general reserve is decreasing significantly, and it needs to be strengthened, and addressed, considering it as an excuse to pass the borrowing project, and also stressing that the draft, which was rejected by a majority members of the Finance Committee of the National Assembly.

The deputies then called on the government to find alternatives to diversify sources of income instead of going to borrow directly.