3.2 C
New York
Friday, August 7, 2020

Nigerian Troops Kill Kidnap Kingpin, Zwa Ikyegh, Rescue 32 in Benue

The Defence Headquarters has disclosed that the Nigerian troops of Operation WHIRL STROKE have got rid of a notorious kidnap kingpin, Zwa...

Latest Posts

Maurizio Sarri Clears Air on Juventus Exit Rumours

Juventus manager, Maurizio Sarri insists his future is not dependent on the result of their Champions League last-16 clash against Lyon on...

I Begged Oshiomhole to Forgive Obaseki – Philip Shaibu

The Edo State Deputy Governor, Philip Shaibu who a few weeks ago defected to the Peoples Democratic Party, PDP, alongside his boss,...

Southern Kaduna: 33 People Killed in Fulani Militias Attacks – SOKAPU

The Southern Kaduna Peoples Union, SOKAPU, has claimed 33 people were killed in another attacks carried out by suspected Fulani militias in...

President Buhari Blasts Service Chiefs; Says “Efforts Not Good Enough”

The Nigerian President, Muhammadu Buhari has taken a swipe on the service chiefs over their strategy in tackling insecurity in the country.

Future Generations Fund: Kuwait in Debate for Future without Oil

- Advertisement -

Kuwait still one of the world’s wealthiest countries, is in a budget crunch so severe that it may have to soon begin leaning on a fund intended to prepare it for a future without oil.

Kuwait is running a deficit that could reach 40 percent of its economy this year, and unable to borrow due to a showdown between the government and parliament, Kuwait is running out of options. The General Reserve Fund has been tapped so aggressively that its liquid assets could come close to being depleted within the current fiscal year, or by April 2021.

That has attention turning to its Future Generations Fund, the world’s oldest sovereign wealth fund and estimated to be the fourth-largest globally. The savings vehicle is meant to secure the wellbeing of future generations of Kuwaitis, who probably won’t be able to rely on oil to sustain one of the world’s most prosperous populations.

One measure being discussed is halting a mandatory annual transfer of 10 per cent of total revenue to the FGF in years when the government runs a deficit. An amendment to the existing law may also allow to transfer as much as 25 per cent in years of surplus. Another option is taking a loan from the FGF, which would be repaid, or for the fund to buy 2.2 billion dinars ($7.2 billion) of assets owned by the Treasury, in order to boost liquidity.

“You’re talking about a country where you have oil wealth and a sovereign fund and an educated population, you have so many things going for you,” said Abdulmajeed Al-Shatti, a Kuwait-based economic consultant who was previously chairman of the Kuwait Banking Association. “Unfortunately, we have mismanagement of fiscal policies and a lot of unnecessary subsidies.”

The government has tried over the years to reduce wasteful spending, but as economic damage from the pandemic and low oil prices spread across the Gulf, Kuwait mustered one of the smallest fiscal adjustments among its neighbors. Ministries have been asked to lower their budgets for the current fiscal year by at least 20 percent.

And even when the government has made decisions – such as offering support for private-sector allowances – most haven’t yet been implemented. In the meantime, companies are going bankrupt and there’s no new law governing employers’ relationship with workers, who still can’t be furloughed.

The state is calling in dues and scrounging up cash where it can. In April, the Finance Ministry asked state-owned Kuwait Petroleum Corp. to transfer 7 billion dinars in dividends owed to the Treasury. Parliament’s finance committee last month also asked the KIA for its view on halting the 10 percent payment as well as transferring the FGF’s annual profits into general reserves, according to a copy of the document seen by Bloomberg.

Some of the crisis is self-imposed, with lawmakers resisting efforts by the government to borrow, saying it should stop mismanaging public finances before going out to markets again. Kuwait has one of the highest credit ratings in the Middle East.

Its Gulf neighbours sold a combined $24 billion in Eurobonds in April alone, with demand for Saudi Arabia’s $7 billion sale-topping $50 billion.

The lawmakers are rejecting all attempts by the government to cut citizens’ salaries and subsidies though, which account for more than 70 percent of spending. While the government would need legislative approval to enable it to sell debt or to withdraw from the FGF, authorities require no approval for the fund to extend a loan or make an investment in another part of the government.

Rather than make a deal with lawmakers, the government may choose to wait until parliament’s legislative term ends and then issue an urgent decree to plug the budget gap, according to Abdulwahab Al-Easa, a Kuwaiti political commentator. He said deeper reforms would be probably off the table for now, given an upcoming parliamentary vote.

“Any economic reform in an election year will definitely be very hard,” Al-Easa said. “The government has a lack of marketing tools to convince people of economic reform.”

- Advertisement -

Latest Posts

Maurizio Sarri Clears Air on Juventus Exit Rumours

Juventus manager, Maurizio Sarri insists his future is not dependent on the result of their Champions League last-16 clash against Lyon on...

I Begged Oshiomhole to Forgive Obaseki – Philip Shaibu

The Edo State Deputy Governor, Philip Shaibu who a few weeks ago defected to the Peoples Democratic Party, PDP, alongside his boss,...

Southern Kaduna: 33 People Killed in Fulani Militias Attacks – SOKAPU

The Southern Kaduna Peoples Union, SOKAPU, has claimed 33 people were killed in another attacks carried out by suspected Fulani militias in...

President Buhari Blasts Service Chiefs; Says “Efforts Not Good Enough”

The Nigerian President, Muhammadu Buhari has taken a swipe on the service chiefs over their strategy in tackling insecurity in the country.

Don't Miss

Edo Election: Campaign Group Director, Board Members for Gov. Obaseki Resign

Patrick Iyoha, Director, Obaseki/Shaibu Movement, a campaign group working for the re-election of Edo Governor, Godwin Obaseki, has resigned.

LASEMA Reacts to Ajao Estate Cooking Gas Explosion

In an earlier report, about five persons were feared dead with many injured as cooking gas explosion occurred in Ajao Estate, a...

Father, Antonio Hicks Sr. Lost Temper; Beats Son to Death

A Houston father, Antonio Hicks Sr. faces upgraded charges after his arrest on accusations he beat his 2-year-old son to death.

BBNaija: Housemates Clash Over Meal, Praise Threatens Everyone with HOH

Earlier today a fight broke amongst BBNaija housemates over meal issues. The fight which began between Tolanibaj and Ka3rna was over food....

Dr Stella Emmanuel: Donald Trump Retweets Coronavirus Video Flagged on Social Media

The United States President, Donald Trump and his son, Donald Trump Jr. had on Monday retweeted a viral video from Dr Stella Emmanuel that...

Stay in touch

To be updated with all the latest news, offers and special announcements.