The Times Kuwait Report
The fourth and final session of its 15th legislative term of the National Assembly held a special sitting on 8 October to confirm and pledge loyalty to the new Crown Prince H H Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah. Parliament then concluded its legislative term and adjourned sine die to await the formation of a new National Assembly after general elections slated for the end of November.
With curtains drawn on the current legislative term, and many lawmakers headed to seek the mandate of their constituencies for a return-ticket to the Abdullah Al-Salem Hall, now would be an appropriate time to assess the performance, or the lack thereof, of the outgoing legislative term. Perhaps, it would also be an apt moment to recall and reflect on the sagacious words of the late Amir H H Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, delivered at the start of the 15th legislative term. in December 2016.
In his address at the inauguration of the legislative term in December 2016, the late Amir told the new lawmakers of the need for urgent reforms to boost the country’s economic growth. Stressing that cuts in public spending were inevitable to “initiate effective measures to remedy the budget deficit and alleviate its effects”, Sheikh Sabah said, “All have to realise that this is no time for political luxury, or making gains at the expense of Kuwait’s higher interests.”
Could the outgoing parliamentarians in all honesty say that they had heeded and followed the advice of the late Amir? H H the Prime Minister Sheikh Sabah Al-Khaled would probably only give a hesitant nod to the accomplishments of the previous legislature. But then, Sheikh Sabah Al-Khaled presided over the Cabinet for only less than a year during the four-year term of parliament, and a large part of his Cabinet’s time and effort was spent in fighting the COVID-19 crisis.
Understandably, in his speech delivered at the conclusion of the 15th legislative term, the prime minister limited his praise to the achievements of government departments in their efforts to tackle the coronavirus. The speech was conspicuous for what was said, as much as for what was left unsaid. While congratulating the government entities for their constructive cooperation in efforts to fight the pandemic, Sheikh Sabah Khaled was deafeningly silent when it came to highlighting accomplishments of the 15th legislative term.
In all fairness, at the tail-end of its tenure the parliament did approve a slew of bills within a short span in August and September. Among the bills that received parliament’s nod was a law limiting the transfer of state funds to the Future Generations Fund, to assist the government tackle the ongoing liquidity crunch. In addition, parliament also passed a long-awaited insolvency bill, designed to attract foreign investment. Lawmakers also approved a historic law specifically targeting domestic violence that aims to protect survivors of abuse, activate shelters for victims and criminalise domestic violence.
However, there is no denying that much of the outgoing parliament’s time was devoted to acrimonious debates and discussions, allegations and accusations, and grillings galore. A ‘feather in the cap’ of the 15th legislative term would probably be that it was able to coerce the resignation of two cabinets, pressure a prime minister to refuse accepting the post, and compel the appointment of a new prime minister. The question that remains at the end of the outgoing parliament’s four-year term is, did it achieve the country’s lofty goals outlined at the start of its tenure.
Back in 2016, the then Prime Minister Sheikh Jaber Mubarak Al-Hamad Al-Sabah had unveiled the country’s ambitious economic development plan for the period 2016 to 2020, which included measures to boost economic growth, promote the private sector and attract more foreign investment. The prime minister also promised economic legislation and a “radical approach” so that the country “could compete with advanced economies, restructure its budget, diversify its product base and engage in financial and economic reforms”.
What happened?
Kuwait still ranks low in the annual ‘Doing Business’ report by the World Bank, in 2019 it ranked 97th out of 190 economies. Last year, it not only fell one rung from the position it occupied a year earlier, it also continued to remain at the bottom among the six-nation Gulf Cooperation Council (GCC) bloc. And, despite valiant attempts to boost Foreign Direct Investment (FDI), according to the United Nations Conference on Trade and Development (UNCTAD) ‘World Investment Report 2020’, FDI inflows to Kuwait in 2019 was barely US$104 million.
The relatively low FDI in 2019 also pointed to a recurring paucity in FDI inflows, with the country reporting FDIs of $204 million in 2018 and $348 million in 2017. To add to the woes of the country’s beleaguered business standing, the global organization Transparency International in its 2019 Corruption Perception Index, placed Kuwait in a dismal 85th position out of 185 countries surveyed.
On another side, employment in a bloated public sector continues to remain an unyielding ‘white elephant’ straining the annual budget. Salaries, wages, allowances, compensations and social security of those working in government entities still accounts for nearly three-quarters of the annual budget expenditure, or around 20 percent of the country’s GDP. These expenditure figures are probably unrivaled by any spending allocations in countries outside the Gulf.
Although reluctantly, the government has repeatedly yielded to pressure from lawmakers and citizens, and accommodated the thousands of young Kuwaitis entering the job market each year. Today, over 80 percent or four-out-of-five working-aged Kuwaiti citizens are employed in government entities. Since those under the age of 21 account for over half the population of Kuwaiti citizens, if the government continues to maintain its unrealistic four-out-of-five employment ratio, over the next 10 years it would have to employ approximately 40 percent more citizens than it does today.
On the economic front, the much-hyped economic diversification has for the large part failed to materialize. The energy sector continues to dominate the economy, accounting for nearly half of the country’s GDP and over 90 percent of export revenue. In recent years, with oil revenues falling and expenditure rising, the government has been consistently tabling deficit budgets. The deficit this fiscal year that ends in March 2021 is expected to reach a record KD14 billion.
The General Reserve Fund (GRF), which is the main repository for Kuwait’s oil revenues, and funds the annual budget, has been drawn down to such an extent that its liquidity is not sufficient to meet the country’s financing needs till year-end. A public debt bill has remained stalled in parliament since 2017 due to objections and obfuscations from lawmakers who blame the executive for mismanagement of the economy. The debt bill would have allowed the government to borrow up to a maximum of KD20 billion over 30 years from the international debt market to help it tide over recurring budget deficits and liquidity crunches.
With over a billion dinars of deficit accumulating each month of this fiscal, the government clearly cannot wait until elections are held and a new parliament is sworn in before reintroducing the public debt bill. Analysts believe that the government might soon exercise its executive authority and issue an emergency decree to pass the public debt law, in line with Article 71 of the Kuwaiti constitution that allows for this provision.
Besides shying away from highlighting the parliament’s achievement, it is pertinent that in his speech at the final session of the legislative term, the prime minister also affirmed the country’s commitment to its democratic legacy and constitutionalism. “Democracy remains the sole option, it is the path for promotion and attaining aspirations for prosperity of our country,” said Sheikh Sabah Al-Khaled. Some would argue that the prime minister’s closing remarks on both, the parliament’s achievements and democracy, needs a second reading.
Ever since Kuwait began its experiment with democracy and a parliamentary form of government more than 58 years ago, there have been 36 Cabinets in and out of office. This alone speaks volumes about the form of democracy and political freedom as practiced in Kuwait, and how it has failed to realize the aspirations of people. Contrary to popular narrative, it is clearly evident that at least in Kuwait, democratic progress cannot be equated with economic progress.
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