Economic Society writes open letter to next Cabinet
KUWAIT: Kuwait Economic Society (KES) has written an open letter addressed to the upcoming Cabinet, according to a press release issued by KES on Wednesday. The KES said in the letter that it is aware of the state of general frustration that prevails on the political scene. Kuwait Economic Society has over successive occasions issued recommendations not to squander public funds, because it is inviolable and its protection is the duty of every citizen.
“What we always strive for in our successive statements is an old approach, values and striving for the loyal sons of Kuwait to preserve the country’s wealth and resources. The time has come for this approach to be inherited by all segments of society, led by public benefit associations, each according to its specialization”, as described by the late Sheikh Nasser Sabah Al-Ahmad Al-Sabah - may his soul rest in peace,” the letter said.
The general budget 2023/2024
The ministry of finance issued the draft preliminary budget for the fiscal year 2023/2024, which estimates a fiscal deficit for the second time in a row of KD 6.8 billion (13 percent of GDP), as a result of higher expenditure allocations amounting to KD 26.3 billion (+11.7 percent compared to the previous budget). Revenues reached KD 19.5 billion (-16.9 percent compared to the previous budget). Accordingly, oil revenues decreased by 19.5 percent from KD 21.3 billion to KD 17.1 billion.
Accordingly, it is expected that the budget will achieve a very small surplus in the end, amounting to about KD 600 million (1 percent of GDP) in the event that oil prices are stable in the current situation ($90 per barrel compared to $70 per barrel). The deficit may reach more than KD 6 billion. Although the expected rise in government expenditures will support demand in the near term, it also adds to the pressures of fiscal sustainability in the longterm, especially in the context of continued over-reliance on volatile oil revenues (88 percent of total revenues).
We cannot overlook an important factor. The pillars of a decent life constitute education, health and infrastructure. Compared to the unprecedented size of the budget, only KD 122.4 million was allocated to cover the costs of medicines in the ministry of health and KD 35 million for spending on road engineering and highway maintenance.
The rise in oil prices today following the Russian-Ukrainian war is unsustainable and in the last five years, budget imbalances are clear and cannot be overlooked. The reports of the Audit Bureau, as well as other economic reports, indicate there is a clear lack of seriousness on the part of state ministries to expedite the implementation of projects included in the development plan in the state budget.
This inflates the deficit and weakens the pace of completion. This includes the gross mistakes of state ministries in estimating their projects.
It is clear that the government is unable to collect its revenues from companies and individuals amounting to KD 2.2 billion as well as from companies that have been delaying in paying taxes since 2009! We cannot ignore the lack of seriousness in paying attention to the collection of punitive fines of companies that fail to implement government tenders.
Preserving public funds
The responsibility of Kuwaiti Economic Society is to support all opinions based on sound economic foundations for issues on the scene, spread sound economic awareness and educate the general public about economic issues that have a great impact on all shareholders in general. We spare no effort in defending public money. Therefore, we must say these basic points in order to feel the spirit of national responsibility. In view of the rapid changes in the global economic arena and the challenges resulting from the economy in general, we encourage everyone to protect public money through investigation committees.
KES had issued recommendations in the past to correct the waste mentality in which matters were managed in the country in the past two decades. Waste does not have to be financial, but it is also administrative as well. In this regard, the KES would like to recall its statement issued in this regard on October 13, 2017, which was based on keeping politics out of technical and economic opinion in order to safeguard public funds and protect the interest of shareholders in a fair manner.
In conclusion, we must stop the policy of squandering the wealth of this country as it is not the private property of anyone to feed on the wealth of the country and its future generations.