Kuwait Times, Wednesday, Sep 9, 2020 | Muharram 21, 1442
KD 945m spending cut from budget as funds exhausted
Kuwait:
Kuwait has cut nearly a billion dinars in expenditure from its budget for
the 2020/2021 fiscal year, the head of the National Assembly budgets committee
said yesterday, adding workers’ rights, benefits and subsidies would not be
affected. MP Adnan Abdulsamad said the state budget for the current fiscal year
– which began on April 1 – projects spending at KD 21.5 billion, after cutting
expenditures by over KD 945 million.
During yesterday’s session, MPs also approved the 2020/2021 budgets of 35
independent government agencies including Kuwait Petroleum Corp, as lawmakers
called on the government to adopt real reforms and stop squandering of public
funds.
Abdulsamad said the budget estimates revenues at KD 7.5 billion after
calculating oil income at a price of $30 a barrel, which leaves a huge deficit
of KD 14 billion. But he expected the deficit to be lower as oil prices have
recovered. The lawmaker said cash flow in the general state reserve fund
deteriorated in recent years because the government failed to take the necessary
measures to rationalize spending.
He said the state reserve fund held KD 50 billion during years of surplus when
oil prices remained high, but almost all the assets evaporated as the government
lacked a prudent fiscal policy. Of the KD 50 billion in assets, KD 24 billion
was used to meet the budget deficit in the past few years since oil prices
crashed in mid-2014. The remaining cash was used for foreign aid, arms spending,
paying the shortfall of the social security agency and other provisions, he
said.
Last month, Finance Minister Barrak Al-Sheetan said assets in the state reserve
fund had been depleted to around KD 2 billion, adding that the state won’t be
able to pay wages in November. But Abdulsamad said a series of measures to
create cash revenues have provided some KD 8.8 billion, which includes KD 3.7
billion after stopping the deduction in favor of the future generations fund, KD
2.5 billion generated from selling assets to the future generations fund and KD
2.6 billion from transferring profits from other government agencies.
Abdulsamad added Kuwait has not yet received $4 billion it deposited at the
Egyptian Central Bank, which matured two years ago. During the debate, MPs
called on the government to change its fiscal policy by restructuring the
government administration, merging similar government bodies and rationalizing
expenditures.
MP Abdullah Al-Roumi said Kuwait is passing through critical times and Kuwaiti
people are looking at the prime minister to take some different actions,
especially since Kuwait’s financial position is not as good as it was in the
past. MP Mohammad Al-Dallal called for diversifying sources of income to reduce
dependence on oil and eliminate unnecessary government agencies.