MPs should back Kuwaiti five-year plan

27 January 2010

The economy’s health depends on the notoriously obstructive parliament voting for the proposal

Kuwait is close to agreeing its first five-year development plan in more than two decades. Parliamentary approval of the bill in February could prove decisive for the economy.

Projections from the National Bank of Kuwait suggest the country will run a budget surplus of $16.7bn for the financial year ending on 31 March. Although multi-billion-dollar surpluses seem to be a boon, a closer look at the figures reveals a worrying trend.

Of the $58.3bn revenues for the year, 93 per cent comes from oil and gas sales, and part of the surplus arises because of a 5-10 per cent under-spend on public projects.

So the surplus is not so much a sign of a robust economy as of one that is hugely reliant on oil for revenues and in which government projects do not go ahead quickly, or sometimes at all.

The five-year plan sets out a spending programme under which the government will inject $125bn into the economy through a series of projects and the creation of new construction and engineering companies, which will be 60 per cent owned by the public.

Kuwait desperately needs to diversify its economy and create jobs for its people. The five-year plan is a step towards making this happen and, for once, it seems the government and parliament are in accord – a majority of lawmakers voted for a draft version of the bill in early January.

If the plan is passed in February and work starts on projects such as the new $15bn Al-Zour refinery or the $77bn City of Silk, it may go some of the way to help reclaim the emirate’s reputation as a business destination.

All of this depends on the country’s notoriously obstructive parliament voting in favour of the plan. The ball is in the MPs’ court.

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