When the government announces a budget deficit of approximately 40 percent, it calls for a closer examination of the figures and a review of whether efforts to diversify income sources have been successful or if the situation remains unchanged. The estimated budget deficit of KD 9.8 billion is equivalent to nearly thirty billion US dollars. This figure is comparable to the budgets of many African countries, several Arab nations, and even some Eastern European states. Unlike these countries, which have multiple sources of income, Kuwait still relies heavily on a single commodity subject to price fluctuations, making it an insecure primary source of revenue. Above all, we must acknowledge that the state possesses considerable potential if managed in a modern manner, in contrast to past decades when welfare-state policies dominated economic decision- making.
During that era, subsidies became an absolute right for everyone, costing approximately KD seven billion annually. Furthermore, due to haphazard appointment policies, the first section of the budget, which is allocated to salaries, has ballooned to consume around 73 to 75 percent of the total budget, while the remaining productive sectors receive a comparatively much smaller share than in other countries. For many years, I, along with many economic and financial experts, have been calling for a change in the approach to managing national income sources, aiming to maximize GDP and reduce reliance on oil as the primary source of revenue. We have called for giving the private sector space to play its economic role without government obstruction.
However, it appears that financial officials hold a different view, which is a perspective known only to senior officials familiar with the attitudes of successive governments. For the past three decades, the National Assembly has often been used as a pretext to justify hindering the progress of government projects. Perhaps this viewpoint holds some truth. Today, the government has huge potential to fulfill its role fully, without obstructive parliamentary interference. Unfortunately, the opposite is happening.
Restrictions on projects and decisions are increasing the deficits of companies and private-sector institutions. This includes the withdrawal of agricultural plots from beneficiaries who sought to reduce the burden on public funds by developing a small portion of the land for agritourism activities to boost their income, similar to practices in other Gulf countries. Moreover, industrial and service plots have been confiscated over minor violations or even based on the mood of an employee when he is unhappy with some beneficiaries.
As a result, addressing the budget deficit is likely to remain a challenge for the government for some time, despite the availability of practical solutions. The first key solution is to encourage the private sector, which is the strongest economic driver in all countries that aim to diversify income sources by collecting taxes and fees, stimulating domestic consumer spending, and promoting free trade locally, regionally, and internationally.
Meanwhile, we are nearing the completion of the Mubarak Al-Kabeer Port project, which will serve as the country’s strategic link between East and West.
When discussing entertainment projects and their importance, the main point is that citizens and residents would spend their money within the country rather than traveling and spending it abroad. Tourism spending overseas amounts to approximately KD four billion annually, with Kuwaitis spending about 11 percent of their yearly income abroad. This massive outflow of funds significantly reduces local investment opportunities in the entertainment and tourism sectors. It is essential to clarify responsibilities for addressing all ongoing avenues of waste.
Service ministers, including the Minister of Commerce and Industry and their subsidiaries, must lift restrictions on investors and those entitled to use industrial and service plots. This responsibility also lies with the Minister of Finance, Kuwait Municipality, and other relevant authorities. It appears that these institutions are contributing to further constraining the national economy through unprecedented restrictions. As a result, the budget deficit continues to grow due to the absence of a sound economic and financial vision. Important measures such as lifting subsidies on goods and services, encouraging domestic consumer spending, developing a comprehensive plan for Kuwaitization, avoiding arbitrary decisions, and motivating young Kuwaitis to join the private sector, provided their work boosts productivity rather than creating disguised unemployment, remain unimplemented.
There are, indeed, several sectors that could serve as sources of national income. For example, farms in Al-Abdali and Al-Wafra, which can produce meat and other food products, could also be developed for tourism and recreational purposes. Industrial plots could be utilized to establish processing industries, increasing national income and helping to reduce the budget deficit. Pressures on beneficiaries of agricultural plots have driven many Kuwaitis to spend their weekends at farms in Khafji or in Iraq, purchasing fruits and vegetables instead of investing in local Kuwaiti farms. This is just one example of the negative impact of restrictive practices on agricultural and industrial holdings. If these assets were managed wisely, they could generate substantial revenue for the state.