Misuse of budget surplus in Al-Kuwait ‘caused imbalances’
Misuse of Kuwait’s state budget surplus, including unproductive spending, has led to structural imbalances in the economy, says its ruler Shaikh Sabah al Ahmad al Sabah. "The misuse of the surplus and not investing it in the right direction has led to structural imbalances in our economy and threatens the future of the country in the implementation of programmes and financial obligations," Shaikh Sabah told the official Kuwait News Agency. He was speaking at the first meeting of an advisory committee set up to look into how Kuwait should address domestic and global economic developments.
His comments chimed with remarks by central bank governor, Shaikh Salem Abdul Aziz al Sabah, in July that the country’s overreliance on oil revenue and the government’s control of all sectors of the economy were causing imbalances in the economy. "The continuation of irresponsible consumer waste and an excessive increase in current unproductive expenditure have deepened the imbalances and the distortions in the economy," Shaikh Sabah said.
The crude producer posted a budget surplus of KD5.3 billion in the 2010/11 fiscal year. Oil revenue accounts for more than 90 percent of the state’s budget, however, putting the economy at risk if currently high oil prices fall sharply. In June, Kuwait’s parliament approved a budget of KD19.4 billion ($71 billion) for the 2011/12 fiscal year, the biggest budget announced since at least 2003 and a 19 percent increase from the previous year.
Kuwait’s fiscal year starts in April. Kuwait’s economy was worst hit in the Gulf by the global financial crisis due to plunging oil prices, with the International Monetary Fund (IMF) estimating its economy shrank five percent in 2009. A poll in June forecast Kuwait’s economy would grow 4.4 percent in 2011 and generate a fiscal surplus of 20.2 percent of gross domestic product in 2011/12.