By B Izzak
KUWAIT: Lawmakers yesterday blamed what they charged as government mismanagement for a record budget deficit posted in the past fiscal year, while an opposition MP claimed the deficit was not real. The finance ministry announced at the weekend that Kuwait had posted a record budget deficit of KD 10.8 billion - the highest ever actual shortfall in Kuwait's history - in the 2020/2021 fiscal year which ended March 31.
The ministry said in a statement that revenues dropped to KD 10.5 billion, while expenditures increased to KD 21.3 billion. Kuwait has been posting budget deficits since the 2015/2016 fiscal year due to a sharp fall in oil prices and as a result of a cut in production to boost prices.
Oil revenue slumped 42.8 percent in 2020-21 to KD 8.8 billion, while other revenue fell 6.5 percent to KD 1.7 billion, the ministry said. Wages and subsides accounted for 73 percent of total expenditure, while capital and infrastructure expenditure accounted for 9 percent. The average Kuwaiti crude selling price for the fiscal year reached $42.36 per barrel, with average oil production of 2.5 million barrels per day, the ministry said.
MP Ahmad Al-Azemi said posting the largest budget deficit is not strange if the government's mismanagement is taken into account. "There is nothing strange in Kuwait posting the biggest budget deficit in its history under the government's mismanagement and escaping from accountability," Azemi said on Twitter. He said the country has been posting deficits for years and no real measures had been taken to contain this trend, adding that the simplest solutions are "to stop foreign aid, reduce astronomical spending by ministries and reclaim public funds from thieves and corrupt people".
MP Osama Al-Munawer however insisted that the deficit is not real and only on paper, because the government does not include all of the country's revenues. He said if the government includes all state revenues and not only those from oil, there will be no shortfall. As per law, Kuwait does not include returns from its foreign assets in the annual budget, instead adding them to the original assets, currently estimated at $700 billion.
Meanwhile, MP Muhalhal Al-Mudhaf asked Finance Minister Khalifa Hamada why Kuwait's per capita income dropped sharply in the past decade. He said according to international reports, including a report by the World Bank, Kuwait's per capita income dropped from $49,578 in 2007 to $32,702 in 2019, a decline of 34 percent. He asked the minister if the reports were true and demanded to know the reasons for such a slide in personal income.
Local media reported yesterday that the economic committee of the Cabinet is considering a number of measures to reduce spending to reduce the budget deficit. Al-Rai Arabic daily quoted informed sources as saying the committee is considering raising the prices of petrol and electricity and reducing other subsidies in a bid to save around KD 2 billion.