Friday, February 26, 2021

Generations reserve puts the government of Kuwait in trouble and popular anger portends a crisis | A nation is tweeting out of tune

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The Kuwaiti government has submitted to the National Assembly a draft of an urgent law that provides for the amendment of the Future Generations Reserve Act, to ensure empowerment. The government has withdrawn an amount not exceeding 5 billion Kuwaiti dinars, “16.5” billion dollars, to meet any emergency deficit afflicting the state.

The draft law, which “Watan” was able to review, stated: “The economic conditions that the State of Kuwait is going through will not be due to. The sharp decline in oil revenues, and is expected to continue for many years.

He continued: “With what may negatively affect the state’s general reserves and the scarcity of cash liquidity, which may result in a deficit in financing the state’s general budgets. The present bill has been prepared to amend some provisions of Decree Law No. 106 of 1976 in the matter of reserves for future generations in order to allow for facing this deficit in the state’s public budgets.

Reserve for future generations

This law caused a wave of controversy among Kuwaitis on communication sites.

And those who launched a hashtag entitled “Reserve_Future_Generations_” tweeted dozens of tweets rejecting the law, which threatens security. The economist of Kuwait, they said.

One of the tweeters said about the hashtag, which was issued among the most popular hashtags in Kuwait: “We will not allow a hand that extends the wealth of our future generations under any justification.”

He continued in a letter to the officials: “The Prime Minister and Minister of Finance, I advise you of the danger of going for this option. If some. He looks at this country as a temporary state. We see it as a permanent state, God willing.

While another tweet went to say that “the Prime Time Zone are supposed to stand a brave stand, but they have been corrupted,” the Kuwaiti nation’s conscience said, plundering and looting money. How long will the Prime Time Zone silence. ”

She stressed the necessity of collective rejection of this step: “The National Assembly is not only standing up, not all Prime Time Zone must stand up to the government. Which wastes Kuwait’s money and its Prime Time Zone is enough absurdity. We stand in the face of every corrupt hand. Whatever claps, we must have a role as a Prime Time Zone.

While he made a comparison between the general reserve of Kuwait in 2014, and its position now in the year 2021.

In his tweet about the tag, he said: “In 2014 the general reserve is 63 billion, in 2020 the general reserve is 0. That is why God forbade us from that. We put our money in the hands of fools when God Almighty says: “Do not give your money to fools.”

As for another tweet, he went on to say that “the Corona crisis has become like the crisis of invasion … a fragile peg for any government failure to comment on.”

For his part, the economist Hamad al-Munawer had another view when he said that “a bill is to withdraw from the generational reserve. Not exceeding 5 billion Kuwaiti dinars annually. With this measure, the government abandon the state bankruptcy dealers and the agendas of the IMF and its followers.

He continued: “Kuwait has given 10 comfortable years to re-engineer the economy and society and build a national project that achieves the Prime Time Zone’s interests. Thank you. For those who made or contributed to this decision.

5 billion dinars annually

The law allows the government to withdraw 5 billion dinars annually from the state’s general reserve, with a requirement to reduce expenses and expenditures.

Kuwait suffers from a large deficit in the public budget for this year, due to the repercussions of the Corona pandemic and the drop in oil prices. Which is one of the basics of Kuwaiti income.

Immediately after the government announced the introduction of the law to amend the future generations reserve law, the parliamentarians attacked the proposed law and confirmed. They will never accept it.

MP Faris Saad Al-Otaibi commented on the matter that this law is flawed and that the National Assembly will not allow it to pass.

As for MP Thamer Al-Sweit, he confirmed that he would reject the law.

The approval of the National Assembly is required to pass the law, and for it to become enforceable and enforceable with the Kuwaiti government.

The Kuwaiti government transferred its last assets

And private sources for the American “Bloomberg” agency said earlier this month that the Kuwaiti government had transferred its last assets. From the General Reserve Fund to the Future Generations Fund, in exchange for liquidity to fill a monthly budget deficit of $ 3.3 billion. This leaves one of the world’s wealthiest countries with few options to pay its bills. The General Reserve Fund, which has depleted a large part of its liquidity, possesses illiquid assets, which are transferred to the Fund for Future Generations in exchange for cash that is used to manage the finances of the troubled state.

The sources pointed out that the assets include stakes in Kuwait Finance House and Zain Telecom Company. The sources said that the state-owned Kuwait Petroleum Corporation has been transferred from the General Reserve Fund to the Future Generations Fund, which is worth 600 billion dollars. It aims to protect the wealth of the Gulf state for the post-oil period. The sources added that the nominal value of the Kuwait Petroleum Corporation is 2.5 billion dinars (8.3 billion dollars).

Fitch earlier lowered the outlook for Kuwait to negative from stable, citing “imminent depletion of liquid assets.” In the absence of a parliamentary mandate for the government to borrow. The rating is confirmed by AA.

And the credit rating agency Standard & Poor’s had warned that it would consider downgrading Kuwait’s rating in the six months. To the next twelve, if politicians are unable to overcome the impasse, which could undermine investor confidence.

Although Kuwait has one of the highest per capita incomes in the world, it has years of low oil prices. The government was forced to burn its cash reserves, while a mounting political confrontation prevented it from borrowing.

In an effort to generate liquidity, the government started swapping its best assets with the Fund for Future Generations for cash since last year. But with this solution finished, it is not clear how it will cover the eighth consecutive budget deficit, which is projected at 12 billion dinars for the fiscal year beginning in April, according to Bloomberg.

Double pressure on Kuwait

Kuwait is dealing with the dual pressures of Corona and lower oil prices. But unlike other countries, the Kuwaiti parliament has blocked proposals to borrow. From international markets to cover the fiscal deficit. Kuwait has not returned to the market since it first issued a Eurobond in 2017.

Parliamentarians have opposed any hint of spending cuts, saying the government should curb waste and corruption before putting the burden on the public. Or resort to debt. Parliament passed a law last year that exempts the government from transferring 10% of revenues to the Fund for Future Generations during years of deficit.

Former Kuwaiti Finance Minister Barak Al-Sheitan warned last year of running out of liquidity and affecting salaries. The minister added that the government. Withdrawals from the General Reserve Fund at a rate of 1.7 billion dinars per month, which means that liquidity will soon dry up if oil prices do not improve. And if Kuwait could not borrow from the local and international markets.

The public debt bill was formally referred to parliament last July and includes allowing the government to borrow about $ 65 billion. For 30 years, however, the Financial and Economic Committee of the Kuwaiti National Assembly rejected the bill.

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Generations reserve puts the government of Kuwait in trouble and popular anger portends a crisis |  A nation is tweeting out of tune