The double hits of the coronavirus pandemic and an oil price crash leaves Kuwait at risk of running out of cash for salaries unless parliament approves a debt law, the country’s finance minister said on Wednesday.
The government is withdrawing from its General Reserve Fund at a rate of 1.7 billion dinars a month, meaning liquidity will soon be depleted if oil prices don't improve and if Kuwait can't borrow from local and international markets, Finance Minister Barak Al Sheetan said.
The minister stressed the need of parliament to agree to the government's bill to borrow up to 20 billion dinars (Dh240bn) over 30 years. But MPs pushed the bill back to the finance committee for further study over the next two weeks, state-run Kuna reported.
Government and parliament have long been at odds over debt reform, which would allow Kuwait to tap international markets. But the issue has become more urgent in recent months as the oil-exporting nation has been hit by low crude prices and the Covid-19 pandemic.
"In light of the lack of borrowing and the failure to implement economic reforms, the state's general reserve will run out of liquidity and will not be able to cover its expenditures due to the deficit," Mr Al Sheetan told MPs.
While MPs pushed back on the borrowing bill, they opened a vital lifeline to the government by passing a bill on sovereign wealth fund payments.
Kuwait automatically transfers 10 per cent of the state's revenue every year to the Future Generations Fund, but the law passed by the national assembly on Wednesday will now only allow transfers to the fund when the year's budget is in surplus.
The move frees up 3.8 billion dinars of accrued money that would have otherwise been sent to the Future Generations Fund, Reuters reported. Some additional money set aside for the fund in the current fiscal year would also now remain available to the treasury, according to the document.
“There are real justifications for rejecting the public debt law,” MP Adnan Abdul Samad said on Wednesday about both the debt law and the halting of the 10 per cent revenue transfer. “It’s difficult to approve the public debt law without budget reform.”
Kuwait’s budget deficit increased 69 per cent to 5.64 billion dinars in the last fiscal year, and the government estimates it will more than double to 14 billion dinars in the current fiscal year, ending March 31, Mr Al Sheetan said. Wages and subsidies accounted for 76 per cent of all spending. The International Monetary Fund expects the government’s financial needs to grow at a rapid rate as its liquidity position weakens.
In June, Kuwaiti Emir Sheikh Sabah issued a call to transform the economy to one less reliant on oil and urged rationalising spending. More than 90 per cent of the country’s revenue is generated from oil.
“In the medium to long-term, in the absence of borrowing, more austerity measures will have to be applied to public spending,” Mr Al Sheetan said. “In several decades, the Future Generations Fund will run out, affecting the welfare of citizens and the state."
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Labour dispute
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2016 - Lewis Hamilton (Mercedes-GP)
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Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
Sources: Jayanti Maitra, www.adach.ae
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Marwan Lutfi says the core fundamentals that drive better payment behaviour and can improve your credit score are:
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Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
The Kingfisher Secret
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UAE squad to face Ireland
Ahmed Raza (captain), Chirag Suri (vice-captain), Rohan Mustafa, Mohammed Usman, Mohammed Boota, Zahoor Khan, Junaid Siddique, Waheed Ahmad, Zawar Farid, CP Rizwaan, Aryan Lakra, Karthik Meiyappan, Alishan Sharafu, Basil Hameed, Kashif Daud, Adithya Shetty, Vriitya Aravind
Specs
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
England's all-time record goalscorers:
Wayne Rooney 53
Bobby Charlton 49
Gary Lineker 48
Jimmy Greaves 44
Michael Owen 40
Tom Finney 30
Nat Lofthouse 30
Alan Shearer 30
Viv Woodward 29
Frank Lampard 29
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The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
In numbers
1,000 tonnes of waste collected daily:
- 800 tonnes converted into alternative fuel
- 150 tonnes to landfill
- 50 tonnes sold as scrap metal
800 tonnes of RDF replaces 500 tonnes of coal
Two conveyor lines treat more than 350,000 tonnes of waste per year
25 staff on site
