It seems that there is an expected shift in the financial and accounting policy of more than one independent government agency that is obligated to transfer its profits to the General Reserve Fund, under the title \u201craising its financial capabilities in order to achieve its independence and its goals, whether supervisory or development.\u201d<\/p>\n
In this regard, the sources indicated that the Central Bank of Kuwait and the Kuwait Petroleum Corporation have applied for permission to increase the ceiling of the general reserve fund balance for the bank and the institution, by reserving their annual net profits until the two required ceilings are reached, reports Al-Rai daily.<\/p>\n
From the accounting point of view, approving this procedure means not transferring the net profits of the Central Bank of Kuwait to its reserve fund at the end of each fiscal year, as is the case in the budgets of independent entities, noting that it is considered a net profit for the CBK profits achieved after deducting expenses and deducting the reserves necessary to face bad debts or doubtful matters, depreciation of assets, contributions to the retirement fund, and other expenses that banks take precautions for.<\/p>\n
In detail, relevant sources revealed to Al-Rai that the Central Bank of Kuwait has asked the Ministry of Finance, after obtaining the approval of its board of directors, to jump the ceiling of its reserves 4 times, from an amount of one billion to 5 billion dinars, indicating that a request to increase its reservoir from the reserve has been approved. .<\/p>\n
The sources indicated that the approval came after months of open discussions by the regulator with those concerned in the Ministry of Finance to convince them of his broad need to raise the ability of this rapid intervention tools to regulate the liquidity of the banking sector, and to carry out his work in complete independence without resorting to the government to approve new liquidity laws if the need arises, as happened when Provide remedies in the crisis of 2008.<\/p>\n
The sources stated that, according to the considerations pushed by the CBK the approval of stopping the transfer of the bank\u2019s net profits to the general reserve until it reaches the ceiling of building its new reserves helps it follow up on the development of interest rates in the local market and foreign markets, and adjusts its impact on monetary and credit policy, in addition to increasing reserves of hard currency<\/p>\n
However, what increases the challenges of these moves on public finances is that despite the importance of raising the ceiling of the CBK reserves, according to the considerations raised by it, it comes at a time when official expectations estimate that the 2023-2024 budget will achieve a record deficit of 6.8 billion dinars.<\/p>\n
These numbers constitute a huge jump to the deficit, which increases fears that stopping the transfer of profits of independent entities to the public treasury will lead to additional pressure on the liquidity of the general reserve, especially if the government fails to obtain the approval of the National Assembly on the public debt law, and if oil prices continue at their current levels in contrast to the increase in its expenditures, which rose in the budget of the current fiscal year compared to the previous fiscal year by 2.752 billion dinars, equivalent to 11.7 percent.<\/p>\n","protected":false},"excerpt":{"rendered":"
It seems that there is an expected shift in the financial and accounting policy of more than one independent government agency that is obligated to transfer its profits to the General Reserve Fund, under the title \u201craising its financial capabilities in order to achieve its independence and its goals, whether supervisory or development.\u201d In this […]<\/p>\n","protected":false},"author":16,"featured_media":135651,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,18],"tags":[],"class_list":["post-135650","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-local"],"yoast_head":"\n