ALRAQABA . ISSUE 18 47 Expert’s Opinion on the Approval of Public Debt Law Boresli: public debt issue should not be circulated only in the event of a deficit!! Dr. Amani Boresli, a former minister and a faculty member in the Finance Department, at the Administrative Sciences College, Kuwait University, said that there are various alternatives available to face the uncertainty of liquidity, other than borrowing. The first option is to raise the fees on state property in all contracts that have expired or are about to expire. In addition to the privatization of some sectors by applying clear methodologies with fair assessments that lead to achieving returns to the state, the issuance of legislation to transfer a percentage ranging from 2 to 4% of the Sovereign Fund revenues to bridge the state’s general budget deficit, as well as reducing the budgets of some government agencies and bodies, and increasing some state services’ fees. Boresli stressed that we need to take serious economic reforms that have a significant positive impact on achieving liquidity, such as combating corruption, laying the foundations of transparency and governance in all state practices and in the methods of awarding tenders, and modifying the demographic structure that exhausted the state’s infrastructure. She also added that the state must have the necessary fundamentals to issue public debt legislation for the public and private debt market and to enhance transparency standards in determining aspects of expenditures and projects to be financed by using the public debt. The state must also be able to pay the public debt upon maturity, and this will require the state to diversify sources of income and diversify the economy apart from the oil income. Dr. Amani Boresli added that public debt issues should not be circulated just in the case of deficit, whereas most countries that have strong economies have public debt legislation to consider such issues all the time, and not in case of crisis only. The public debt legislation must be developed based on the economic aspect and included within the state’s public debt program according to a time frame for payment and issuance with the aim of forming a yield curve. She also stressed that the risks facing Kuwait are due to the absence of financial and economic reform programs and not to the absence of public debt. Therefore, the public debt program must be linked to the state’s comprehensive financial reforms to handle the imbalances of the public sector size and the associated risks of salary inflation and disguised unemployment. Another risk is the possibility of the state defaulting on its short-term liquidity obligations, which may negatively affect the state’s position and reputation. Boresli stated that decreasing the credit rating has a close relationship with the cost of public debt and raising the interest rate on domestic and international loans. It will also affect the state’s financial institutions because its rating is directly linked to the state’s rating, so the state must monitor its credit rating and make serious reforms, especially with regard to the file of diversifying sources of income and adjusting the structure of the economy. Furthermore, the rise in the cost of public debt will also affect the inflation file and economic growth rates. Dr. Amani Boresli commented on the Covid 19- crisis, as she said the pandemic increased the current expenditures in the country and its liquidity needs. It also raised the bankruptcy rates of a large number of commercial institutions, which led to an increase in the need to adjust the economic situation and the need to issue public debt legislation. In conclusion, the former minister and a faculty member in the Finance Department of the Administrative Sciences College at Kuwait University, Dr. Amani Boresli, stated that all responsibility rests with the Council of Ministers and its ability to convince the National Assembly of the importance of economic reforms and to give priority to the public debt file, whereas part of the responsibility rests on the National Assembly to understand the state’s financial situation and its sustainability. Article Feature
RkJQdWJsaXNoZXIy Mjk0NA==