Kuwait Development Forum: Dimensions and Challenges
Kuwait May 19, 2014
1. The first dialectic:
Distribute wealth or create wealth
- This dialectic is in. It is essentially a trade-off between maximizing the well-being of the present generation or securing a decent life for future generations.
- A quick glance at the policies of our current generation shows us conclusively the great risk our current generation is taking in frantically pursuing higher levels of current well-being at the expense of the well-being, income, and fate of our future generations.
2013/2012
Public Spending 91% Current Spending
9% investment spending
Current expenditure 70% Salaries, wages, etc.
30% Subsidies
2005/2004 2014/2013 %
Salaries and Wages 3,200 million dinars 10,400 million dinars 225%
Subsidies 865 million dinars 4,800 million dinars 455%
If this unbridled fiscal policy continues, and assuming oil prices remain stable at around 100 $, the expected cumulative deficit in the general budget in 2030 will amount to about KD 100 billion.
The reserves of future generations will not be able to cover this cumulative deficit in the next 15 years, which may expose our country, God forbid, to real deficits and bankruptcy.
|
2012 |
2012 |
|
|
Government consumption per capita ($ per day) |
Investment as a percentage of GDP |
|
|
UAE |
8.6$ |
22.7 |
|
Bahrain |
9.28$ |
19.8 |
|
KSA |
13.58$ |
25.6 |
| Oman |
11.14$ |
23.7 |
|
Qatar |
40.76$ |
34.1 |
|
Kuwait |
19.91$ |
15.1 |
This dangerous consumption pattern can be seen by comparing Kuwait to its GCC neighbors.
Kuwait's per capita government consumption is more than double the rate in the UAE and the rate in Bahrain, and more than 50% and 80% of the rate in Saudi Arabia and Oman, only Qatar outperforms Kuwait.
3- The size of the government in the economy is unimportant, but government management and policy can be a major impediment to economic growth.
4- Institutional efficiency, transparency, governance and anti-corruption are among the most important catalysts for economic growth.
The World Bank's 2004 report emphasized that corruption is the main factor in the failure of sustainable development in most developing countries.
Corruption is a very old issue. Aristotle in his book "Politics" 350 BC said: 'To protect the public treasury from theft, money should be printed in front of everyone and copies of the accounts should be kept in different places.
There are types of corruption:
Administrative corruption: Associated with bureaucracy.
Political corruption: Such as favoritism, vote-buying, and interference in the judiciary.
Institutional corruption: The absence of legislation that prevents the creation of an incubator environment for corruption, which is the most dangerous and difficult type of corruption.
Corruption Perceptions Index
2013 2012 2011
UAE 26 27 28
Qatar 28 27 22
Bahrain 57 53 46
Oman 61 61 50
KSA 61 61 50
Kuwait 69 66 54
We note that Kuwait continued its decline according to the Corruption Perceptions Index from 54th place in 2011 to 69th in 2013 by 15 places and ranked last among the GCC countries in 2012 and 2013. While the UAE and Qatar maintained the Gulf and Arab leadership as the least corrupt countries.
Non-oil GDP growth:
2012 2003-2007
Kuwait 3% 13%
GCC average 5.2% 9%
The situation is further complicated by the relative decline in Kuwait's Human Development Index (HDI) in 2012 compared to the GCC average, which increased by 3.25%.
Kuwait's non-oil GDP growth slowed from 13% to 3% in 2012 compared to the GCC non-oil GDP growth rates, indicating that Kuwait's non-oil economy is exposed to more severe economic fluctuations than its counterpart in the GCC countries.
This absolute and relative decline in the indicators of corruption perceptions, competitiveness, and human development prompted the Supreme Planning Council to study the phenomenon of corruption in Kuwait.
"Features of a National Anti-Corruption Strategy"
The main findings of this study are:
1- Most of those involved in corruption in the public sector are in senior and leading positions.
2- Kuwaiti society lacks a role model in the application of law and justice.
3- Inadequate anti-corruption legislation.
The million-dollar deposits accused by some members of the National Assembly are the best example of this legislative deficiency.
Conclusion:
"A cooperative team is not humiliated". This is the motto of the people of Kuwait since ancient times. Throughout history, they have proven their ability to overcome difficulties, reject differences, and rise to major national responsibilities through sacrifice and redemption, transcending their sectarian, tribal, and partisan affiliations.
In times of adversity, there is only the homeland, and we are now in dire need of a societal dialogue that results in a national project to be adopted in a collective spirit and take Kuwait out of the state of decline and instability to the stage of preserving the rights of the present and securing the prosperity of the future.