LOC16:15
13:15 GMT
KUWAIT, Dec 30 (KUNA) -- Kuwait's state budget has revealed more dependence
on oil revenues to make up for the deficit in the non-petroleum revenues which
hit KD 9.3 billion, marking a rise of 53 percent compared to last year, the
Kuwait Economic Society (KES) said on Sunday.
Oil revenues contribute about 91 percent of Kuwait's state budget, compared
to 87 percent in 1997, KES Chairperson Rola Dashti said in a press statement
adding that capital expenditure constituted up to 6 percent of the total
public expenditure, compared to 10 percent 10 years before.
Kuwait's foreign trade was also on the decline by 3 percent of the
no-petroleum revenues, that is about USD 1,000 per capita, added to KD 3.3
billion a deficit in the non-petroleum trade balance. This pushes the economy
to depend much on imports, she said.
In addition, the rise in inflation rates pushed for re-evaluation of the
Kuwaiti Dinar through abandoning the sliding USD and pegging the currency to a
basket of foreign currencies.
According to the statement, the financial inflation rate hit a record of 7.
3 percent during the first nine months of 2007, due to the hike in the prices
of real estate, education and health services by 12.4 percent and the increase
in the transport and foodstuffs by 7.3 percent and 4.8 percent respectively,
which boosted pressures on consumers.
Despite the fact that the non-petroleum GDP grew by 12 percent, the
unemployment rate among national labor reached an average of 6 percent, and is
expected to jump to 8 percent, Dashti said.
She pointed out that the public sector appointed up to 75 percent of the
total national labor employed in 2007, "a matter that fostered bureaucracy in
the government departments and pulled productivity down."
Referring to the challenges likely to face the Kuwaiti government in the
new year, the KES affirmed the need to "counter the temptations of the
skyrocketing oil prices, taking them a pretext to put off reforms that are
essential for the security and the future of the Kuwaiti economy on the long
run."
The KES stressed the dire need to vary the sources of the national income,
liberate the production sectors, create a competitive business environment
characterized by transparency in addition to a favorable climate for
creativity and knowledge.
Supporting the private sector through enacting laws that support small and
medium scale enterprises (SMEs) is necessary so as to reduce reliance on the
public sector, provide new jobs and boost the free market trends.
On Kuwait's financial policy, the KES said it needs to address the
infrastructure projects and providing more economic incentives to encourage
local and foreign investments. Curbing the consumption policy is also
essential.
The KES also called for reviewing the oil pricing policy adopted by
Kuwait's state budget "for a balanced budget based on real oil prices in the
world markets" which are higher than official prices.
According to the report, the reliance on the oil revenues led to a hike in
demands of social rights and distortions in the labor market and human
resources development.
The KES hopes that the new year will be that of "economic legislations"
through the issuance of legislations on privatization, protection of consumers
and state property, comprehensive tax, service fees, combating monopoly and
protecting competition, bids and the capital market authority.(end)
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