Resetting Relations Key to Parliamentary Consensus
THE TIMES KUWAIT REPORT
The snap general elections held on 4 April returned results that were largely expected, with all but 11 of the parliamentarians from the previous legislative term returning to the National Assembly. Political analysts predict that the lineup of elected lawmakers could point to a potential continuation of frayed relations between the executive and legislative wings in parliament..
Despite this political reading, there is fervent hope among many people that this time around it would be different, and that the 18th legislative term of the National Assembly could witness a reset in relations, and herald the beginning of a new chapter distinguished by cooperation, coordination and constructive engagement between the two entities in parliament.
A collaborative parliamentary environment is vital to tackle the various economic and social challenges confronting Kuwait, and to find solutions to many of the intractable issues that have evaded resolution over the years. A harmonious relationship is also essential to adopt the several fiscal and economic reforms that have remained stalled in the National Assembly for far too long.
In particular, parliamentary consensus is needed for diversifying the economy away from its overwhelming reliance on oil income. Transitioning the economy from its current rentier model and shifting towards a more stable, sustainable and productive framework is critical for the country’s sustainable development and to sustain the welfare of citizens.
However, many legislators and the public they represent are opposed to any initiative that could curtail the prodigious largesse and benefits currently provided by the state. With prudent measures such as rationalizing salaries, reducing subsidies, trimming the bloated public sector, and limiting welfare handouts, being non-starters in parliament, the upcoming new cabinet will be hard-pressed to find coherent solutions to address the many challenges that lie ahead.
And, there is no dearth in the number of issues that need speedy resolution. With parliament set to open on 14 May, the ministers will have to evaluate the various obstacles hindering progress in their respective domains, find appropriate solutions, and outline priorities in tackling them.. Among the multitude of challenges awaiting ministerial resolution are reviving the New Kuwait 2035 Vision, and implementing the long-pending social, financial and economic reforms.
The ministers will also have to approve critical infrastructure and utility projects, encourage greater private sector participation in the economy, and promote foreign investments. Concomitantly, they will also have to introduce measures to enhance public services, combat corruption, reduce bureaucratic hurdles, and rectify administrative inefficiencies.
Generating gainful employment opportunities for the tens of thousands of young nationals entering the labor market each year, will be a priority for the upcoming government. But this poses yet another challenge, as a bloated public sector that gnaws the largest chunk of public expenditure in the annual state budget, is no longer capable of absorbing all the young citizens who apply each year.
Attempts by the authorities to reduce the pressure on the public sector by encouraging nationals to seek employment in the private sector, and goading private companies to absorb citizens, have both failed to achieve desired outcomes.
Analysts point out that most youth prefer government jobs because of the higher remuneration, better working conditions, and generous perks that accompany jobs in the public sector.
Bridging the discrepancy in emoluments and benefits between public and private sectors would be key to attracting youth to work in private enterprises. But this would then push government’s expenditures even higher and result in the annual budget moving into deep deficit territory. Given this dilemma, the executive and legislative wings will have to reach broad consensus on exploring and implementing innovative strategies to create job opportunities for nationals.
Continued confrontations, conflicts, and ensuing political instability, which have in recent decades become the hallmark of parliamentary life in Kuwait, have increasingly become a cause of concern to many citizens. The public disquiet was reflected in a recent informal media survey, where many citizens voiced frustration at the persistent strained parliamentary relations.
Urging legislators and the government to work together in the nation’s interest, many citizens called for a new beginning — one based on shared visions and specific goals to be achieved within a defined time frame. They also stressed on the need to intensify efforts and harness resources to reinvigorate the New Kuwait 2035 vision, and to ensure sustainable development by diversifying the economy, rationalizing government spending, and boosting non-oil revenues.
The two parliamentary entities were also exhorted to resolve structural imbalances in the national economy, create an investment climate that would attract foreign capital, boost business competition, and privatize non-productive government entities. Encouraging public-private partnerships and developing specialized economic zones that could serve as commercial, financial and cultural hubs, were also priorities for many citizens.
Emphasizing that people were the pillar to build a productive and sustainable economy, survey respondents called for measures to encourage young nationals to pursue innovative and creative enterprises in newer transformative technologies. Additionally, they urged for empowering Kuwaiti women in decision-making roles, eradicating all forms of discrimination, securing rights of the differently abled, and updating legislation to safeguard these rights,
Many of the views expressed by citizens in the informal survey were a reiteration of findings by the International Monetary Fund (IMF) following its Article IV Consultation program in Kuwait last year. The Fund noted that frequent government changes, and the political impasse between the government and parliament have in recent years impeded important fiscal and structural reforms in the country.
The IMF pointed out that reform bills — such as the new debt law needed for orderly fiscal operations, and the value added tax bill — have been awaiting parliamentary approval for quite a while. Meanwhile, political developments have delayed implementation of the structural reform agenda proposed by the previous government under its program of action.
The Fund noted that although oil revenues form the main income source for the country, the government has only limited sway over the two essential aspects of oil — its price and its production. Oil prices are dictated by volatility in the global energy market, while oil production is increasingly regulated by the need to conform to quotas set by the Organization of Petroleum Exporting Countries (OPEC) and its non-OPEC allies.
The Fund warned that this lack of oversight on its main income resource posed a two-sided risk to Kuwait’s economy — it curbed the country’s potential growth, and negatively impacted its fiscal and current account balances. The IMF added that external potential threats to the economy are further exacerbated by domestic risks such as delays in needed fiscal and structural reforms, which then undermine investor confidence, and hinder progress in economic diversification.
On the plus side the Fund noted that high oil prices have improved the fiscal and external balances, and allowed replenishment of the state treasury, the General Reserve Fund (GRF), as well as increased assets of the Future Generations Fund (FGF), and reserves of the Central Bank of Kuwait (CBK). The combined corpus of these entities. which amounted to around 450 percent of GDP as of end-2022, enables Kuwait to tide over adverse economic and fiscal situations, and to address long-standing structural imbalances from a position of strength.
However, the fiscal and structural reforms, as well as economic restructurings needed to drive the economy forward, will pivot on the government and legislators finding the means to resolve the prevailing political gridlock. A new parliament is an opportunity to reset relations — an option that the two parliamentary entities could do well to seize.
