Kuwait’s Financial Policy

The fiscal year 2018/2019 ended and the actual general expenditures was at KD 21.849 billion, about KD 349 million higher before adjusting the appropriations expenses to KD 22.773 billion, this is KD 2.601 billion or about 13.5% higher than the expenses of the preceding fiscal year 2017/2018. With this figure the usual saving of about 7.6% for the fiscal years from 1993-1994 to 2017-2018 between estimated and actual expenditures disappeared for the first time. Indicators show that the financial reform policies are not only void but reaffirm that the financial policy runs in the opposite direction of reform. With the close convening of the final session of the National Assembly’s legislative chapter I forthcoming October 15th, the Government still announces its readiness to go ahead with more uncontrolled financial policy to guarantee its continuation or some members within it. This implies continuation of the no-return policy of reform potentials and the preparation for inevitable unveiled unemployment among young citizens.

At a time when the world is prevailed by pessimistic economic scenarios, the world is at best approaching an era of slow growth   estimated   by   the   International 

Monetary Fund “IMF” (July 2019 Report) by 3.2% and 3.5% for 2019 and 2020 respectively and reduces it with each new report. This as we mentioned, is the best expected scenario while there are scenarios with increased opportunities of realization that expect the probability of global economy recession, i.e. when it will be subject to an era of limited negative growth both in number and time, or to some,  it  will  a  more likelihood of a long-term depression, which we do not believe in.  That message seems not to have arrived in Kuwait yet.

That pessimistic view of the global economy future performance is backed by the intensified trade war between the two largest global economies: The American and the Chinese. It is also supported by the European Union chaos with the British unsystematic exit, and by the US Federal Reserve cutting the interest rates being worried about the weak economic growth, and is supported by the exhaustion of the monetary policy instruments in the remedies of the 2008 Financial Crisis. It is also supported by the world’s sovereign and private debts reaching a record level that is equivalent to about four times the size of the global economy in 2018, or about US$ 330 trillion as of the end of 2018, which is one third more than its 2008 level according to “UNCTAD”, our region including Kuwait is even worse. In addition to the indirect negative impact of all the above factors, the outlook confirms that the future of its economic growth will be the weakest versus other regions and oil prices are at half the 2013 price level and their future does not look promising. Finally, the entire region is in a state of high cost chaos of conflicts and disagreement despite the current scarcity of resources.

We can almost confirm that some of our public administration know these realities and their enormous repercussions and also know that the sustainability of public finance in its current approach is impossible and that the greatest harm to the country is the result of imprudent fiscal policies. We believe that they know that the best policies and decisions are the proactive ones to avoid risks before they occur and not those that deal later with their repercussions. However, their policies are tantamount only to the reaction level which does not success in most cases. All world public administrations without exceptions, are concerned about the future. Only Kuwaiti public administration thinks and decides in a different direction.