DUBAI Oct 8 Kuwait's new finance minister has
issued a stinging criticism of the country's bloated
administration and bureaucratic red tape, saying the economy
cannot continue growing robustly in the long term if they are
The comments by Sheikh Salem Abdulaziz al-Sabah, carried by
state news agency KUNA on Monday, were his first extensive
public policy statement since he took his job in August.
Sheikh Salem left the central bank last year after 25 years
as its governor, protesting against a rapid rise in government
spending. It is not clear whether he will have more success in
shaping Kuwait's fiscal policy in his new role.
His remarks echoed criticism by the International Monetary
Fund, which said last week that despite its huge oil wealth,
Kuwait needed to rein in public spending, especially on wages,
and find new sources of income to protect its budget
Sheikh Salem, a member of Kuwait's ruling Al-Sabah family,
said structural imbalances in the state budget, inefficiencies
in the labour market and the limited role of the private sector
were the most prominent challenges facing the OPEC member's
These imbalances are partially or wholly linked to "the role
played by the government in economic activity, which has
resulted in the oversized growth of its administrative sector
and the complication of procedures, thus hindering sustainable
growth," KUNA quoted him as saying.
He acknowledged that Kuwait's fiscal and current account
surpluses were strong at present but added that they were
fundamentally linked to the performance of the global oil
market, which meant it was important to find a sustainable model
for economic growth.
Kuwait's budget surplus fell to 12.7 billion dinars ($44.8
billion) - equivalent to 24.7 percent of gross domestic product,
still one of the highest levels in the world - for the fiscal
year that ended in March, he said. Its current account surplus
stood at 22.2 billion dinars in 2012.
The IMF has forecast Kuwait's fiscal surplus will come in at
27.4 percent of GDP in 2013/14 after 33.4 percent in 2012/13,
higher than the finance ministry's estimates.
But in view of recent sharp rises in the government's
current spending and relatively small non-oil revenues, state
expenditure could exceed oil revenues by 2017/18, raising the
risk from any sustained drop in oil prices, the IMF said.
Analysts in a Reuters poll in September predicted the budget
surplus was likely to shrink to 23.7 percent of GDP in 2013/14
and 18.5 percent in the following fiscal year.
Like other wealthy Gulf Arab states, Kuwait provides a
generous welfare system and does not collect income tax, but it
has lagged peers such as the United Arab Emirates and Qatar in
raising competitiveness and foreign investment.
It has the most open political system in the Gulf Arab
region but infighting and bureaucracy have slowed tens of
billions of dollars worth of economic development plans that
were originally announced in 2010. Parliament has pressured the
cabinet into boosting spending on social welfare handouts.