48 ALRAQABA . ISSUE 18 AL-THAQEB: “ THE GOVERNMENT HAS BEEN TOO LATE TO MAKE BUDGETARY REFORMS, AND THE MISMANAGEMENT OF THE STATE’S GENERAL RESERVE FUNDS HAS MADE THE PROBLEM EVEN WORSE! ” Dr. Saud Al-Thaqeb, a faculty member of the Department of Finance - College of Business Administration, Kuwait University, stated that the government of the State of Kuwait has been too late to make budgetary reforms. He also added that the mismanagement of the State’s general reserve funds has made the problem even worse. Such factors have led the credit rating agencies to downgrade Kuwait’s sovereign credit rating. This move is also attributable to the International Monetary Fund (IMF) and World Bank’s reports, which have always highlighted, years before the emergence of COVID-19, the need for budgetary reforms in the State of Kuwait. In his statement, Al-Thaqeb pointed out that the present economic policies are unsustainable not only in the long but also in the short term, which is a fact agreed upon by all global agencies as well as local and international experts. He also highlighted the need to reconsider the economic policies in the State. It is necessary to get back to the basics and ask fundamental questions about the roles and responsibilities of the government, people, and private sector and how such parties would work together and cooperate to form a brand new economic identity to be adopted in the years ahead. Further, Al-Thaqeb stressed the need to open all files of corruption in the State and hold the corrupt accountable for all the detected cases. He added that in order to gain the trust of the public, all cases of corruption should be uncovered and held with complete transparency. Transparency shall, therefore, be embraced as a motto for the coming era, particularly when handling issues related to the financial and economic situation of the State. Al-Thaqeb also added that there is a need to downsize the government by eliminating and merging some government institutions and agencies, fully or partially privatizing the public service sectors, and transforming some government service agencies into state-owned enterprises (SOEs). It is necessary to impartially evaluate the experience of all government agencies, such as the National Fund for Small and Medium Enterprise Development, the Kuwait Authority for Partnership Projects (KAPP), and the Kuwait Direct Investment Promotion Authority (KDIPA), Al-Thaqeb said. The government shall then decide whether such agencies be upgraded, merged in their functions, or abolished in a way that achieves the economic vision of the State. In this regard, Al-Thaqeb pointed out that institutional overlapping should be ceased, and the government shall efficiently capitalize on the available resources by activating the role of all government institutions. Besides, Al-Thaqeb added that borrowing would be the best existing option to end the liquidity problem facing the State of Kuwait. He noted that it is a common practice in most countries worldwide to resort to borrowing on a nearly yearly basis, including developed countries such as the United States, France, Germany, and United Kingdom. However, the main concern with borrowing would be how the Kuwaiti government would manage the funds that will be borrowed. In the event that the funds are used to pay for the current expenses, as the case in the past years, the Kuwaiti government will end up right back to where it started. Therefore, it is imperative to have specific and clearly defined controls and targets for borrowing in order to ensure the proper reform of the State’s fiscal policy. He further added that the funds must be used wisely, and the capital spending shall be targeted toward generating direct or indirect returns to the State’s budget. Borrowing is merely a temporary solution to the liquidity problem; it is just a postponement of the actual economic dilemma we are in. Al-Thaqeb pointed out that it is normal for the public to be apprehensive about the public debt law, particularly in the absence of a clearly defined plan for budgetary and economic reforms. In fact, the options on the table today Article Feature Article Feature
RkJQdWJsaXNoZXIy Mjk0NA==