Anti-aus­ter­ity MPs threaten re­form plans

Kuwait Times - - FRONT PAGE -

A par­lia­ment packed with law­mak­ers who op­pose wage cuts and taxes, and who want to keep Kuwait’s sump­tu­ous wel­fare state in­tact, is threat­en­ing the govern­ment’s at­tempts to close a gap­ing bud­get deficit. Op­po­si­tion can­di­dates won about 24 out of 50 seats last month in a par­lia­men­tary elec­tion seen by Kuwaitis as a ref­er­en­dum on aus­ter­ity mea­sures aimed at deal­ing with the 2016/17 short­fall, fore­cast at KD 9.5 bil­lion ($31 bil­lion).

Ci­ti­zens of the coun­try, one of the world’s wealth­i­est, have bris­tled at re­cent fuel sub­sidy cuts and util­ity price hikes that the govern­ment pushed through the out­go­ing par­lia­ment with rel­a­tive ease. But the new law­mak­ers say they are de­ter­mined to pro­tect ba­sic ser­vices and jobs in a pub­lic sec­tor, which em­ploys more than 90 per­cent of work­ers. Gov­ern­ments across the Gulf - also try­ing to rein in spend­ing in an era of flag­ging oil prices - are watch­ing closely as the govern­ment tries to pass more re­forms, in­clud­ing tax­ing cor­po­rate prof­its and cut­ting govern­ment wages and benefits.

Kuwait’s op­po­si­tion, which in­cludes the Mus­lim Brother­hood, lib­er­als, tribal rep­re­sen­ta­tives and in­de­pen­dents, say the govern­ment should trim other costs first, in­clud­ing what it calls “wasted ex­penses” such as an over­seas med­i­cal al­lowance. By law, Kuwaitis, who en­joy the fourth high­est gross do­mes­tic prod­uct per capita in the world, can travel abroad for spe­cial­ized med­i­cal treat­ment at the ex­pense of the govern­ment.

Op­po­si­tion fig­ures elected to the Assem­bly say the al­lowance, which costs an es­ti­mated KD 760 mil­lion a year, is used to line the pock­ets of peo­ple with ties to govern­ment.

“The Assem­bly wants the govern­ment to ra­tio­nal­ize un­nec­es­sary ex­pen­di­tures be­fore head­ing to the citizen,” in­vest­ment fund Kuwait Farabi’s CEO, Fouad AlHad­laq, said. “The MPs were say­ing in their cam­paign ‘we have no prob­lem to pay money but we are not first in the line... We want to see a ra­tio­nal­iza­tion from the high­est (levels of of­fi­cials)’.”

Health Min­is­ter Ali Al-Obaidi has de­nied ac­cu­sa­tions that govern­ment of­fi­cials si­phoned off pub­lic money through con­tracts re­lated to over­seas med­i­cal treat­ment. He says a num­ber of med­i­cal of­fices are to blame for “re­ported ir­reg­u­lar­i­ties”, ac­cord­ing to a state­ment car­ried last month by state news agency KUNA. Kuwait spends KD 2.9 bil­lion on sub­si­dies, or about 15 per­cent of 2016/2017 pub­lic spend­ing, down from KD 3.78 bil­lion last year, ac­cord­ing to the fi­nance min­is­ter in Jan­uary.

The Na­tional Assem­bly has the right to grill govern­ment min­is­ters, in­clud­ing the prime min­is­ter and block leg­is­la­tion and is fre­quently at log­ger­heads with the Cabi­net. The govern­ment has had a rare smooth ride since 2012, and has been try­ing for years to ap­prove a new strat­egy aimed at di­ver­si­fy­ing the econ­omy away from oil. The strat­egy - known as “The Eco­nomic Re­form Doc­u­ment”, is an at­tempt to re­draw the state’s role in the econ­omy, in­creas­ing the role of the pri­vate sec­tor, try­ing to get ci­ti­zens to in­vest in pub­lic pro­jects and re­form­ing the la­bor mar­ket.

“The­o­ret­i­cally, the doc­u­ment is pos­i­tive . ... But, prac­ti­cally, the ac­cep­tance of it by the rep­re­sen­ta­tives of the Kuwaiti peo­ple is dif­fi­cult, be­cause there is waste in other things,” Al Jo­man Cen­ter for Eco­nomic Con­sul­tancy gen­eral man­ager Naser Al-Nafisi said, call­ing the amount spent on for­eign med­i­cal treat­ment “an astro­nom­i­cal fig­ure”. “How the govern­ment saves 150 mil­lion di­nars from rais­ing fuel prices that im­pacts ev­ery citizen ... and keeps quiet about the waste of 600 mil­lion di­nars? This is not rea­son­able. The govern­ment is con­tra­dict­ing it­self,” he said.

The im­passe has im­pli­ca­tions for par­lia­ment too, how­ever. The con­sti­tu­tion gives HH the Amir the right to dis­solve the par­lia­ment. Dur­ing the past 10 years, since Sheikh Sabah Al-Ah­mad Al-Jaber Al-Sabah came to power, none of the par­lia­ments has com­pleted its con­sti­tu­tional 4-year term. “It is im­pos­si­ble for the govern­ment to move ahead with the aus­ter­ity pro­gram. And if the govern­ment in­sisted and wanted to face (par­lia­ment), this will only bring about the de­struc­tion of Kuwait,” Kuwaiti Muraba­hat In­vest­ment’s Ex­ec­u­tive Vice Pres­i­dent, As­set Man­age­ment, Muhan­nad Uth­man AlMes­bah said. — Reuters

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