Govt aus­ter­ity mea­sures top elec­tion cam­paigns

MPs slam ram­pant cor­rup­tion, lack of re­forms

Kuwait Times - - FRONT PAGE -

Can­di­dates in Kuwait’s par­lia­men­tary elec­tions have fo­cused their cam­paigns on un­pop­u­lar gov­ern­ment aus­ter­ity mea­sures, as the oil-de­pen­dent coun­try faces fi­nan­cial stress due to low crude prices. Kuwait, which sits on around seven per­cent of the world’s proven crude re­serves, has re­sorted to a se­ries of mea­sures to cut spend­ing and boost non-oil rev­enues in a bid to di­ver­sify its econ­omy.

But mea­sures in­clud­ing rais­ing power and wa­ter charges and hik­ing petrol prices have trig­gered a political cri­sis, lead­ing to the par­lia­ment be­ing dis­solved last month and snap polls be­ing called for Nov 26. “The gov­ern­ment has tried to re­solve the economic cri­sis by rais­ing funds from cit­i­zens, like hik­ing petrol prices,” in­de­pen­dent can­di­date Hisham Al-Baghli charged at an elec­tion rally last week. “This pol­icy will result in se­ri­ous con­se­quences for or­di­nary cit­i­zens,” warned Baghli, a for­mer law­maker.

Be­fore crude prices be­gan to slide in mid-2014, Kuwait gen­er­ated around 95 per­cent of its in­come from oil. But the coun­try’s oil rev­enues dropped from a mas­sive $97 bil­lion in the fis­cal year 2013/2014 to just $40 bil­lion last fis­cal year, which ended on March 31, ac­cord­ing to finance min­istry fig­ures. And oil in­come is pro­jected to slide fur­ther to around $35 bil­lion this fis­cal year. In 2015/2016, the OPEC state posted its first bud­get deficit of $15 bil­lion af­ter 16 years of sur­pluses.

The gov­ern­ment - which had in­creased its ex­pen­di­tures to record lev­els be­tween 2006 and 2015, mainly on wages and sub­si­dies - cut its spend­ing by around 15 per­cent af­ter oil prices dropped by 60 per­cent. It has lifted sub­si­dies on diesel and kerosene, hiked petrol prices by 40 to 80 per­cent and de­cided to raise power charges from next year. The mea­sures have trig­gered fiery re­ac­tions from par­lia­men­tary can­di­dates seek­ing to drum up pub­lic sup­port.

“Un­der­min­ing the in­come of cit­i­zens through gov­ern­ment mea­sures is a red line... and will be firmly con­fronted by the next par­lia­ment,” said Askar Al-Enezi, a for­mer law­maker who hopes to be re-elected. Kuwait has been pro­vid­ing a gen­er­ous cra­dle-to-grave wel­fare sys­tem to its na­tion­als, who make up 30 per­cent of its pop­u­la­tion of 4.7 mil­lion. “We won’t al­low the gov­ern­ment to plug the bud­get deficit from the pock­ets of cit­i­zens,” said Ja­mal Al-Omar, an­other can­di­date.

The gov­ern­ment has in­sisted that with­out aus­ter­ity mea­sures, it may not be able to pay wages, which ac­count for over half of ex­pen­di­tures. Ha­mad Al-Matar, who is also run­ning in the polls, said Kuwait’s de­pen­dence on oil as its only source of in­come put the coun­try in a pre­car­i­ous sit­u­a­tion af­ter the price slump. “What has ag­gra­vated the economic cri­sis is ram­pant cor­rup­tion in many state in­sti­tu­tions,” the for­mer op­po­si­tion mem­ber of par­lia­ment said. He and other can­di­dates said the gov­ern­ment has failed to carry out economic re­forms and di­ver­sify sources of in­come to re­duce its de­pen­dence on oil.

Dur­ing its 16 years of sur­pluses, Kuwait amassed re­serves worth $600 bil­lion in­vested mostly abroad. But to plug grow­ing bud­get short­fall, the coun­try has started bor­row­ing for the first time in two decades. The gov­ern­ment has is­sued do­mes­tic bonds worth $4.6 bil­lion as part of mea­sures to finance the bud­get deficit, the finance min­is­ter said on Tues­day. It plans to start is­su­ing for­eign bonds to­talling around $10 bil­lion early next year, he said.

The Fitch Rat­ings agency be­lieves fis­cal mea­sures in Kuwait will be im­ple­mented only partly, it said on Wed­nes­day. “Ex­e­cu­tion risks are also high for other pro­posed re­forms... as they could prove to be com­plex and po­lit­i­cally con­tentious,” it said in a re­port. A to­tal of 454 can­di­dates, in­clud­ing 15 women, have regis­tered to stand for elec­tion to the 50-seat par­lia­ment. The elec­tion sees the re­turn of ma­jor op­po­si­tion groups and in­di­vid­u­als, end­ing a four-year boy­cott in protest against the gov­ern­ment for amend­ing the vot­ing sys­tem. — AFP

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