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Kuwait’s public spending soars to 50% of GDP, reveals ESCWA

The report stated that Kuwait stands at a pivotal point in its economic trajectory, grappling with key challenges in financial sustainability and the effectiveness of social spending.

• Kuwait scored 0.54 on the efficiency index, below the global average of 0.74. Closing this gap could save 6.8 billion dinars—27% of public spending for 2023/2024.

• Social spending, comprising 44% of Kuwait’s budget, has seen a 12% per capita decline since 2018/2019, with education still falling short of global standards despite significant investments.

• Aligning Kuwait’s financial strategy with UN SDGs is vital to economic stability and improving global rankings, advancing its economic and developmental goals.

A report by the United Nations Economic and Social Commission for Western Asia (ESCWA), as cited by Al Qabas newspaper, highlights that Kuwait stands at a pivotal point in its economic trajectory, grappling with key challenges in financial sustainability and the effectiveness of social spending.

The report, titled “Social Spending, Efficiency and Financial Sustainability: Strategies for Rebalancing Kuwait’s Budget,” provides a detailed analysis of current shortcomings and proposes reform measures to enhance the efficiency of Kuwait’s economy. It highlighted that public spending constitutes 50% of the country’s gross domestic product (GDP), significantly higher than the global average of 37%.

The report further stated that the management of this spending lacks efficiency, as Kuwait scored 0.54 on the efficiency index compared to a global average of 0.74. It indicates that improving efficiency to reach the global average could generate financial savings estimated at 6.8 billion dinars—approximately 27% of the state’s public spending for 2023/2024.

Education and health spending

Regarding social spending, which accounts for 44% of the total public budget, the report noted a 12% decline in per capita expenditure since 2018/2019. It also pointed out that the education sector, which represents 12% of the public budget, continues to lag behind international standards despite substantial spending over the years.

In the health sector, high public spending has not effectively addressed key challenges. For instance, about a quarter of Kuwait’s population suffers from diabetes, underscoring the urgent need to enhance the effectiveness of health expenditures.

Diversifying the economy by bolstering non-oil sectors

The report called for the implementation of comprehensive financial reforms to strengthen Kuwait’s economy, with a primary focus on diversifying the economy by bolstering non-oil sectors and supporting the private sector.

It also emphasized the need to enhance non-oil revenue collection mechanisms and adopt performance-based budgets and digital platforms to improve transparency and increase efficiency.

Additionally, the report underscored the importance of developing public services, particularly through investments in preventive healthcare and the modernization of medical infrastructure.

The report further recommended enhancing education by improving teacher training, updating curricula, and expanding research initiatives to support long-term economic and social objectives.

In this context, the report’s author, Neringan Saranji, stated that “Kuwait needs immediate action. The implementation of targeted financial reforms is not an option but a necessity to protect the economy and ensure the welfare of citizens.”

Imbalanced distribution of government transfers

The report highlighted issues with the equitable distribution of government transfers, noting that wealthier households benefit from 22% of total transfers due to the lack of effective targeting mechanisms. It recommended re-rationalizing transfers to focus on low- and middle-income families, which could free up significant financial resources to be redirected towards critical development sectors.

Sustainable development goals at the heart of reforms

The report emphasized that aligning Kuwait’s financial strategy with the United Nations Sustainable Development Goals (SDGs) is essential for ensuring long-term economic stability. Implementing these reforms could improve Kuwait’s rankings on global indices, such as the Human Development Index and the Sustainable Development Goals Index, positioning the country more favorably to achieve its economic and developmental aspirations.



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