The British "Economist" magazine touched on the subject of the Kuwaiti National Assembly's approval of Kuwait's general budget for the fiscal year 2022-2021, on the 22nd of this month, during a special session, which it described as "unstable", noting that "Kuwait's actual deficit may be much less than estimated. ".
This came in a report by the British magazine's "Economist Intelligence" unit, published by the Kuwaiti newspaper "Al-Rai", today, Sunday, in which it stated that the approval of government spending plans 3 months after the start of the fiscal year, although the country suffered from an unprecedented financial crisis during the year. 2020 due to the decline in oil revenues, evidence of the imbalance that the political system in Kuwait is currently suffering from.
She pointed out that the prolonged stalemate between the executive and legislative authorities meant that the budget was approved without modification to the draft, which was unveiled last January, and without being discussed in the National Assembly or reviewed by the relevant parliamentary committee.
The unit believes that approving the budget will not change its expectations of shrinking the deficit from 20.9% of GDP in 2021-2020 to 8.5% of output in 2022-2021.
She added that the deficit will shrink further and stabilize during the period between 2022-2025, with the easing of oil production cuts approved by "OPEC", the rationalization of spending by the authorities in real terms, and the introduction of value-added tax (VAT) in 2023-2022.
She stated that although the approved budget estimates the deficit at 12.2 billion dinars ($40.4 billion), expectations indicate that the actual deficit may be much less than that. Given that the price of a barrel of oil is above $45, which is the price assumed in the budget.
She pointed out that "The Economist" expects that the average global oil prices will reach $68.5 per barrel in 2021-2022.
The Economist indicated that the chronic deficit was exacerbated by permanent tensions with the National Assembly, which led to the failure to fully implement capital spending plans.
She explained that the public sector wage bill will absorb the bulk of the expenses again (71.6%), while only 15% (3.5 billion dinars) have been allocated to development projects, with a focus on modernizing the state's physical and social infrastructure, especially health care facilities, and addressing aspects of Shortcomings caused by the Corona virus.
It is noteworthy that last March, the Kuwaiti Ministry of Finance announced recording a deficit of 5.9 billion dinars ($19.5 billion) during the first 11 months of the fiscal year (2020-2021), in light of the repercussions of the Corona pandemic.
Kuwait had decided to reduce the volume of expenditures in the general budget for the fiscal year 2020-2021 by about 945 million dinars ($3.1 billion).
It is noteworthy that Kuwait is experiencing a difficult economic crisis; Due to the effects of the Corona pandemic and low oil prices, the main source of more than 90% of government revenues.
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