ALRAQABA . ISSUE 18 45 - Propose a package of reforms to be taken on the public finances and the local economy, particularly the legislative reforms that contribute to boosting the economy. - Grant more opportunities for the private sector in Kuwait as partners in advancing the local economy and lifting the fiscal burdens of the government. This entails opening opportunities for the private sector to participate in the execution of national development projects and facilitating their engagement with the government through PPP contracts, which would, in return, create more job opportunities for Kuwaiti citizens. - Take necessary actions to ensure the availability of funds needed to cover the first repayment of foreign debts amounting to $3.5 billion (approximately KD 1.068 billion). - Examine the adverse impact of the COVID-19 pandemic on the national economy, particularly as the real GDP contracted by around 8.9% to 9.9% in 2020. - Ensure the collection of all dues to the State’s Treasury in order to replenish the General Reserve Fund and bolster its resources. - Ensure coordination between the concerned parties, e.g., the Public Debt Department of the Ministry of Finance and the Kuwait Petroleum Company (KPC), regarding borrowings contracted by KPC for funding its capital projects, as directed by the Council of Ministers resolution. Key Terms Used in the Article - Public debt: all funds borrowed by the government to meet the needs they were acquired for, such as paying for a budget deficit or financing mega projects, through the different debt instruments, whether the conventional (i.e., bank loans, issuance of sovereign bonds...etc.) or Sharia-complaint debt instruments (i.e., Murabaha, Tawarruq, issuance of Islamic Susuk…etc.) - Gross Domestic Product (GDP): all goods and services produced by a country in a given year. GDP can be calculated either at current prices or at constant prices on a certain date. - Deficit: a budget deficit occurs when expenditures exceed revenue. An estimated deficit would be represented in the State’s general budget, whereas an actual deficit would be evidenced in the final accounts. - Credit Rating: it is an indicator assessing the creditworthiness of the State, a company, or a bank. The ratings are assigned by internationally recognized credit rating agencies with high credibility and impartiality. - Global credit rating agencies: 1. Standard & Poor’s (S&P Global) was founded in 1860 and currently controls 40% of the global credit rating market. The recorded revenues of S&P have reached $2.6 billion. 2. Moody’s Investors Service, an American agency founded in 1909, currently controls 40% of the global credit rating market. Its recorded revenues amounted to $2 billion. 3. Fitch Ratings, an American agency founded in 1913, currently controls 10% of the credit rating market with revenues amounting to $1.7 billion. -Monetary policy: it is a policy mandated to the central banks, which entails using a set of tools to control the overall supply of money in the markets and enhance economic performance. In conducting monetary policy, central banks usually use tools such as interest rates, discount rates, and open market operations (e.g., buying and selling securities). - Fiscal policy: a policy mandated to the Ministry of Finance that aims to manage the economy and elevate the financial and social conditions of the State. It involves the management of government spending and the collection of revenues. The main tools of fiscal policy are support policy, taxation policy, public employment, and transfer payments. Article Feature
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