Surplus misuse causes imbalance: Kuwait emir
Kuwait, August 15, 2011
Misuse of Kuwait's state budget surplus, including unproductive spending, has led to structural imbalances in the country's economy, its ruler Emir Sheikh Sabah Al-Ahmad Al-Sabah was quoted as saying by state news agency Kuna on Monday.
"The misuse of the surplus and not investing it in the right direction has led to structural imbalances in our economy and threatens the future of the country in the implementation of programmes and financial obligations," Sheikh Sabah said.
He was speaking at the first meeting of an advisory committee set up to look into how Kuwait should address domestic and global economic developments.
His comments chimed with remarks by central bank Governor Sheikh Salem Abdul-Aziz Al-Sabah last month that the Opec member's over-reliance on oil revenue and the government's control of all sectors of the economy were causing imbalances in the economy.
"The continuation of irresponsible consumer waste and an excessive increase in current unproductive expenditure have deepened the imbalances and the distortions in the economy," Sheikh Sabah added.
The crude producer posted a budget surplus of 5.3 billion dinars in the 2010/11 fiscal year. Oil revenue accounts for more than 90 percent of the state's budget, however, putting the economy at risk if currently high oil prices fall sharply.
In June, Kuwait's parliament approved a budget of 19.4 billion dinars ($71 billion) for the 2011/12 fiscal year, the biggest budget since at least 2003 and a 19 percent jump from the previous year. Kuwait's fiscal year starts in April.
Kuwait's economy was worst hit in the Gulf by the global financial crisis due to plunging oil prices, with the IMF estimating its economy shrank 5 percent in 2009.
A Reuters poll in June forecast Kuwait's economy would grow 4.4 percent in 2011 and generate a fiscal surplus of 20.2 percent of gross domestic product in 2011/12. - Reuters