Ministry of Finance halts new deals without approval to protect budget

• The Ministry of Finance revised the procedures for inventorying and evaluating state-owned real estate, both within and outside Kuwait, to cover all non-financial circulating assets.

• All government agencies must manage and operate their facilities through their administrative and technical apparatus and ensure the smooth running of business and the provision of services in the best possible way.

The Ministry of Finance has directed government agencies to refrain from entering into new bilateral agreements or memoranda of understanding with either local or foreign parties that could impose financial burdens on the state’s general budget or generate financial revenues for the public treasury, unless approved by the ministry. This directive is part of amendments made by the ministry to the rules for implementing government agency budgets on a cash basis, effective from the current year 2024/2025.

These amendments include a stipulation that no decisions adding financial burdens to the budget may be made without the ministry’s review and approval. This now explicitly includes any form of agreement, whether governmental or non-governmental, that might directly or indirectly impact the state’s general budget or generate revenue for the treasury.

Additionally, the ministry revised the procedures for inventorying and evaluating state-owned real estate, both within and outside Kuwait, to cover all non-financial circulating assets.

Regarding disputes between government agencies and the Audit Bureau, the updated circular now requires that all disputes over the bureau’s oversight of the Council of Ministers be presented and studied, without specifying which party must submit the disputes.

The ministry also introduced five new articles to the general rules. Notably, Article 43 permits government agencies to receive donations and gifts from various entities, provided they align with the agencies’ objectives and legal competencies. These must be approved by the Ministry of Finance after initial consent from the relevant minister or delegate, following the guidelines in Circular No. 1 of 2024.

Article 45 elaborates that government agencies may accept donations and gifts for construction projects, contingent on the ministry’s approval to assess financial implications and make appropriate decisions. This information is reported by Al Anba newspaper.

The ministry included a new article in the circular, No. 44, which states, “All government agencies must manage and operate all their facilities through their administrative and technical apparatus and ensure the smooth running of business and the provision of services in the best possible way. No agency may contract directly or offer management and operation practices or tenders except in cases of extreme necessity and after obtaining prior approval from the Ministry of Finance for General Budget Affairs. The request must include the necessary justifications, detailed bases for calculating financial cost estimates and their elements, the functional and administrative organizational structure of the agency, and all other supporting documents.”

Limits on Audit Bureau’s oversight authority

The Ministry of Finance added a new general rule under No. 46, stating that all government agencies must adhere to Cabinet Resolution No. 1129/Secondly for the year 2023, regarding the circular to all ministers emphasizing Cabinet Resolution No. 418/Firstly for the year 2016.

This resolution specifies that the Audit Bureau’s requests for decisions and regulations governing the performance of government agencies’ work are outside its jurisdiction in financial oversight.

Article 47 states that “all government agencies must maintain the proper use of owned assets and exercise control over them, in accordance with the provisions of Circular No. 4/2022 regarding the organization and inventory of non-current financial assets.”