Kuwait sets up authority for economic reforms

Published April 9th, 2001 - 02:00 GMT

OPEC member Kuwait, faced with years of economic slowdown despite surplus generated by high oil income, on Sunday, April 8, set up a "committee for development and economic reforms" the Cabinet said in a statement. 


The committee, which is headed by Foreign Minister Sheikh Sabah Al-Ahmad Al-Sabah and includes several ministers, is to oversee the implementation of a long-awaited program of economic reforms, also approved by the cabinet.  


The program calls for dealing with "distortions in the state budget through privatization, restructuring of the administrative staff and financial reforms" said the statement issued following the weekly cabinet meeting. 


The program also aims at boosting the contribution of the private sector to the national economy and amending distortions in the labor market, dominated by a large unskilled foreign work force. 


"The program consists of long-term and short-term targets to prepare a better economic environment," Finance Minister Yussef Al-Ibrahim told AFP. "Short-term targets include administrative and legal measures to be adopted by various ministries and departments. These only need decisions and should come into effect within three months to one year," he said. 


The Minister said the program envisages "slight increases" of charges in some public services. "Don't expect there will be taxes or huge hikes in charges. There will be gradual measures in the form of incentives in some sectors, or restrictions in others to curb growth in consumption rates," Ibrahim said. 


The program calls for applying the brakes on public expenditure, which has been growing steadily in the past few years. "Our focus will be to cut spending in certain sectors, especially the first chapter (of wages and salaries) in the budget," the minister said.  


More than 93 percent of Kuwait's 220,000-strong work force is employed by the government from which they get high salaries, lucrative benefits, generous time off and practically no accountability. Salaries for staff at ministries and public establishments account for more than half of the $16-billion budget for 2001/2002 fiscal year, which began on April 1. 


A World Bank team visited Kuwait last year to advise the government on ways to "energize" the private sector, study obstacles to real economic reform and make proposals to transfer state-run public services to the private sector. 


All Kuwaiti citizens — only a third of the 2.2 million population — enjoy a cradle-to-grave welfare system. They pay no income tax, enjoy free medical care and education, have guaranteed employment, and receive heavily subsidized housing and low-priced utilities and fuel. — (AFP, Kuwait City) 


© Agence France Presse 2001

© 2001 Mena Report (www.menareport.com)

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