Kuwait PM cautions that welfare state ‘unsustainable’

Kuwait's prime minister warns citizens they may need to depend less on the government in coming years. Elizabeth Dickinson reports

Kuwaitis line up to vote in their July parliamentary elections. Kuwait’s welfare system provides citizens with grants and loans for education, health, housing, and subsidies on electricity and fuel. RShow more

KUWAIT CITY // Kuwait’s prime minister has cautioned that the country’s welfare state is “unsustainable” and warned citizens they may need to depend less on the government in the coming years.

The comments came as part of the government’s new four-year development plan, presented to newly elected parliament set to convene today after a break for the Eid holiday.

“Everyone must understand that the existing welfare state that Kuwaitis are used to cannot continue,” Sheikh Jaber Al Mubarak Al Sabah said, according to the text of the development plan. “It’s necessary that Kuwaiti society shifts from a consumer of the nation’s resources to a productive people.”

Kuwait’s welfare system provides citizens with grants and loans for education, health, housing, and other services. Some of the country’s most costly subsidies, however, are on the prices of electricity and fuel. Gas prices have remained fixed for 15 years and are the lowest in the Gulf region.

Although Kuwait expects a budget surplus this year, the International Monetary Fund warned last year that spending levels would outpace revenues from oil by 2017.

Local media quoted the government’s new development plan yesterday as projecting a deficit that could range from 51 billion Kuwaiti dinars (Dh665bn) to 414bn dinars by 2035, depending on spending levels.

Members of the government have repeatedly expressed concern about Kuwait’s spending on subsidies and grants, arguing that more of its oil revenues should go towards infrastructure and other investment, or saved for future generations.

Last week, the country’s finance minister and former central banker, Sheikh Salem Abdulaziz Al Sabah told, Al Arabiya television that his government could review subsidies, with an eye to limiting government spending, though he later clarified that any changes would not affect Kuwaiti citizens.

The new development plan would call for some subsidies to be reconsidered, though it said that the least-privileged Kuwaitis would not suffer. It also promised to create 77,500 new public and private sector jobs for Kuwaitis and to privatise a number of services and state companies in a bid to improve efficiency.

The government’s development plan will now face scrutiny in parliament, where similar reform agendas have faced strong resistance in the past as some members have pushed for increased assistance, such as a debt forgiveness package worth $2.6 billion that passed earlier this year.

But some members of the new parliament said yesterday they were ready to work with the government on its development plan. The new speaker, Marzouq Al Ghanim, said on Saturday that MPs and ministers had agreed to “overcome differences” to push forward development plans.

“The aspirations of the Kuwaiti people are high and we have responsibilities and challenges ahead of us that we need to address with a spirit of cooperation, determination and action,” he told reporters.

“We need stability,” said Saleh Ashour, a member of parliament, referring to previous disputes between the government and parliament.

“We have a lot of things we need to do.”