The Public Institution for Social Security

The Public Institution for Social Securities is facing a fierce assault related not only for an irreparable disruption of its funds balance but also for an essential change in its goals and policies that will inevitably lead to the loss of its function. It is an institution designed for social security as provided by its name and not for social or political lending, which is the core of the crisis. The two goals are contradictory to the point of collision. Social security means a stable and expanding security net in order to secure the future of those who consumed their youth working while social political lending concerns a minority by an instant benefit which leads to breaching the safety net and narrowing the space for future members. While the social security specialty and its functional body is the delicate balance between the needs of all generations indefinitely, the specialty of lending institutions is limited in scope and is monitored by sovereign bodies due to its high risk level and it cannot continue without operating on commercial grounds. When the two goals are mixed, the purpose of lending will dominate as a result of lack of awareness on one hand and the government weakness on the other and the dominance of the populist orientations of some deputies on another. Then the institution will no longer be a social security institution and the future retirees will lose their security.

Going back to the figures, they are conclusive in the destruction caused by those populist proposals. Without them, the actuary deficit rose by 90%, or about KD 8 billion in just three years to about KD 17.4 billion. The worst will occur that cannot be compensated. Anyone concerned with the public finance status knows that resorting to it to compensate the accumulated deficit is impossible without beginning to liquefy the future generations’ reserves assets, or by borrowing at a cost that will be at least three times the return of the populist proposed insurance loans. Liquefaction or borrowing is unsustainable solution despite their enormous cost. Anyone interested in macroeconomic indicators knows that borrowing in Kuwait means consumption in an economy that does not produce goods or services. Further, consumer loans from banks rose by 26.3%, or about 10 times the increase in total credit facilities in the first eight months of this year. Therefore, it is stimulation for foreign productive economies and pressure on the Kuwaiti Dinar and confirmed involvement of the borrower after the end of the period of spending the proceeds of the loan. In other words, it is an attempt to for economic and social sabotage. More importantly, we are in a country with a single source of income with salaries, wages and subsidies consuming about 75% of all its expenditures and about 80% of all oil revenues. While 340,000 citizens are currently employed by the government, there are 28,300 unemployed persons and 420,000 are expected to join the labor market by 2035.  The result of the attack is that neither the retirees’ future is safe nor future arrivals to the labor market will find it.The irony is that we believe that there is a team in the government and its institutions who knows these facts well but we do not see a stand or reaction to it. In fact, we read nowadays that the government will likely approve the populist proposals. We hope that the advice offered by a former Minister of Oil will not be repeated when he convinced the Council of Ministers that the cadres of the oil sector will not be borne by the public finance and it was a disaster for the public finance. Tolerance in the Social Securities’ loans is similar and will result in destroying the Institution by its deviation from its goal in particular and by a major disruption of its funds balance and the public finance balance in general.