Kuwait: The General Reserve Fund (GRF) has 1.5 billion Kuwaiti dinars (17.9 billion dirhams) in the more than 38 days, Kuwaiti media reports.
Lately, the fund has 3 billion Kuwaiti dinars in cash, up from 4.5 billion Kuwaiti dinars in March.
“Naturally, when government spending exceeds its revenue, it reduces the overall reserve,” Tareq Al Saleh, head of economic studies at Gulf Bank Kuwait, told Gulf News.
The decline in oil and the COVID-19 pandemic have had a negative effect on the Kuwaiti economy, as public spending has increased and government revenues have declined.
The General Reserve Fund, controlled by the Kuwait Investment Authority (KIA), is the country’s main fund because it retailes state oil revenues and investment income.
Based on a Fitch Ratings report, the fund fell for the sixth year in a row, mainly due to deficit financing and national maturities repayment.
“Kuwait has no monetary problems; has an economic problem. The government will need to start implementing long-term reforms to diversify revenue, develop governance and create jobs outside the public sector through support for the personal sector,” Al Saleh said. .
Last month, the government discussed the use of the Future Generation Fund, also controlled through KIA, to address the economic effect of COVID-19.
“Exploiting the reserve is not ideal. Consideration should be made to adopting a public debt law while meeting the requirements for long-term reform,” Al Saleh said.
The public debt bill was introduced to Parliament in 2018 and resubmitted in April 2020. The bill will allow the Kuwaiti government to borrow cash abroad, thus reducing the desire to exhaust the General Reserve Fund as well as long-term generations. Funds.
In April, Marzouq Al Ghanem, president of the National Assembly, announced that the 2018 bill was unlikely to be approved by parliament and that the government would propose a new bill taking into account the effect of the pandemic on the local economy.
Low oil and pandemic costs can lead to an 11% deficit until the end of the year, the International Monetary Fund estimates.
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