Kuwait may spend as much as KD15bn ($52bn) between March 2010 and 2011 as it moves to push through a series of long-delayed projects and pay off its citizens’ debt.
The size of the budget under consideration for the coming financial year ranges from KD12-15bn, the country’s finance minister, Sheikh Ahmed al-Fahad al-Sabah, said on 14 January. A KD15bn budget would mark a 24 per cent increase on the government’s planned spending for 2009-2010, of KD12.1bn.
Kuwait wants to push through a series of major infrastructure projects in 2010 after years of stagnation due to political infighting. Sources close to the government of Prime Minister Sheikh Nasser Mohamed al-Ahmed al-Sabah say the cabinet is emboldened after facing down parliamentary questions in December (MEED 1:1:2009).
Projects including a planned $15bn planned oil refinery at Al Zour and a $17.4bn joint venture deal with US petrochemicals giant Dow Chemical Company were cancelled in 2008 and 2009 because of intense political opposition to the nature of deals involving international firms.
Bankers, analysts and senior government officials all tell MEED that political deadlock between opposition parliamentarians and the government along with the country’s unwieldy bureaucratic infrastructure have made it impossible to pass through other major schemes like a planned $75bn city, Madinat Al-Hareer, in the bay of Kuwait.
Economic analysts remain sceptical over the government’s ability to see its spending programmes through.
The local National Bank of Kuwait (NBK) says that the country may run a surplus of up to KD6.4bn ($22.5bn) in the year ended 31 March 2010 on the back of lower than planned spending and higher than anticipated oil prices.
NBK also notes that the planned budget for 2010-2011 may be higher than the year before because of plans to write off private debt in the oil-rich state.
The country’s National Assembly, or parliament, passed a bill on 5 January calling for the government to buy Kuwait citizens’ debt from banks and erase interest payments, although the government may still veto the law.