* Aims to increase contribution to 25 pct from 10 pct
* 36-year-old fund for when oil money gets tight
* Handled by the sovereign wealth fund KIA
(Adds analyst comment, details)
By Sylvia Westall and Ahmed Hagagy
KUWAIT, Sept 17 OPEC member Kuwait plans to more
than double the portion of state revenues it puts into a rainy
day fund, mostly from oil, to 25 percent this fiscal year, the
state news agency said on Monday.
Kuwait's cabinet has asked the finance ministry to make the
change in the budget for the year ending in March 2013, news
agency KUNA said. It was not clear whether the increase would
extend beyond the current financial year.
The move is thought to be aimed at investing state money
more efficiently although the government has not disclosed a
specific reason for the increase.
Kuwait, one of the world's richest countries per capita and
a major oil producer, currently puts 10 percent of its annual
revenues into the Future Generations Fund, a nest egg for when
oil runs out. The fund was set up in 1976 and is managed by the
Gulf state's sovereign wealth fund, the Kuwait Investment
The fund invests outside Kuwait and all of its investment
income is reinvested.
"This order came after discussing a number of issues related
to economic affairs and the situation going forward," Finance
Minster Nayef al-Hajraf said, according to KUNA.
Kuwait does not disclose the size of the Future Generations
Fund, but it is thought to be in the tens of billions of
dollars; the size of the KIA's general reserve fund is thought
to be well in excess of $300 billion.
The KIA was not immediately available for comment.
Kuwait booked a record budget surplus of 13.2 billion dinars
($47 billion) in the fiscal year that ended in March thanks to
robust oil income and lower spending than planned.
"This move shows the state is aware of the need to put
financial surpluses into reserves rather than having increases
in salaries and handouts," former finance minister Bader
al-Humaidi told Reuters.
More than half of Kuwaiti nationals are under 25, according
to 2009 figures from the Public Authority for Civil Information.
A long-running political crisis has held up investment in
the tiny Gulf state, especially in large infrastructure
projects, allowing the budget surplus to grow. A 30 billion
dinar ($107 billion) development plan aimed at boosting and
diversifying the economy has stalled.
The political crisis revolves around a row between the
elected parliament and the appointed government led by the
Al-Sabah ruling family.
The government also grappled with strikes by public sector
workers earlier this year, who had called for pay hikes of more
than 25 percent.
(Additional reporting by Dinesh Nair in Dubai; Editing by Amran
Abocar and Susan Fenton)