Parliament, A Mute Witness To Deficit Budgets, Surplus Fisticuffs

Vituperative language that ended in fisticuffs between lawmakers was the denouement of a special session of parliament called to pass the budgets of ministries and other government entities on Tuesday, 22 June.

In what could arguably be the shortest session to debate the state budget, the two budgets were passed in record time by 32 legislators voting in its favor, one MP casting a dissenting vote, and 30 lawmakers deciding to abstain from voting.

The approved budgets were then referred to the government for enactment. The Cabinet heaved a sigh of relief at the passage of the bill, but only after Parliament Speaker Marzouq Al-Ghanim cancelled the remaining special session due to the lawless behavior by lawmakers.

His Highness the Prime Minister Sheikh Sabah Al-Khaled Al-Sabah and his Cabinet ministers voted in favor of the budget while remaining standing at the threshold to parliament — marking another first in the country’s six decade long march along the path of parliamentary democracy. They did not enter the Abdullah Al-Salem Hall in protest against opposition lawmakers who refused to vacate the seats allotted to the Cabinet.

The events of Tuesday added another ignominious chapter to the litany of shameful events witnessed in recent years within the hallowed Abdullah Al-Salem Hall of Parliament. Attempts to drown parliamentary dissent in unparliamentary language and the physical violence that ensued between legislators was a sequel to events that had been simmering for the past many months.

The special session called to pass the government budgets for 2021-22 just happened to be the tipping point when things boiled over.
Last Sunday, while calling for the special session of parliament, the National Assembly Speaker Marzouq Al-Ghanim had said in a press statement that passing the budgets was critical to the functioning of the State. He urged government members and opposition MPs to put aside their political feuds and attend the sessions in the wider interests of the country and its people.

In a press statement, Al-Ghanim clarified that he had received a request from 15 MPs to hold special sessions to debate and approve the state budget. However, shortly after the Speaker’s statement, several opposition MP’s voiced their objection to the special session and said they would not allow the budget sessions to be held until the prime minister agreed to the interpellation motion filed by several opposition members.

According to article 140 of the Kuwait’s Constitution, the government must draw up the annual budget and submit it to the National Assembly for examination and approval at least two months before the end of each current financial year. The fiscal year starts in April of every year and ends on 31 March of the following year.

The government had submitted its budget plan in January, but its approval by the National Assembly had been delayed over the months by an opposition determined to paralyse parliamentary proceedings.

In late April around two dozen MPs said they would prevent Assembly sessions from taking place unless the prime minister agreed to take the podium to be questioned. A month earlier, in late March, during a parliamentary session boycotted by the opposition, the government had voted to postpone the grilling of the premier until the end of 2022. The opposition cried foul and said the decision to postpone the interpellation was unconstitutional.

In recent weeks, opposition lawmakers have been protesting in parliament by sitting in seats allocated to the ministers, this led to the government deciding not to attend the sessions and the Speaker having to call off repeated sessions of the National Assembly. While this childish game of musical chairs and one-upmanship goes on in parliament, the country’s economy withers and people squirm in embarrassment at the antics of their elected representatives while bemoaning the state of Kuwait’s democracy.

The antics of parliamentarians and the long-term repercussions from prevailing democratic shortcomings notwithstanding, on Tuesday, Finance Minister Khalifa Hamada managed to wiggle his 2021-22 state budgets through the National Assembly. The budget envisages an expenditure of KD23 billion for the fiscal year that started on 1 April, against an estimated revenue of KD11 billion, and resulting in a deficit of over KD12 billion, which the finance minister described as “monumental”, before adding that it could have major implications for citizens and the national economy.

Lower oil revenues, rising expenditures, and depleting state coffers have led to recurring budget deficits in recent years. Around 72 percent of expenditure is allocated for public sector salaries, subsidies and bonuses, which financial experts and analysts warn is clearly unsustainable, while calling for urgent economic and financial reforms.

The saving grace of recurring budget deficits in recent years have been the lower oil price per barrel estimated in annual budgets as against higher prevailing prices at the end of the fiscal year. Such lower oil price estimations have allowed the finance ministry to show a reduced deficit by the end of each fiscal year. The 2020-21 budget is an exemplar of this annual financial juggling act by the ministry.

The budget for the previous fiscal year 2020-21 was based on an oil price of $30 per barrel. Kuwait Export Crude oil averaged at $39.5 per barrel during the last fiscal year, which was appreciably above the budget price of crude for the year. As a result, the actual oil revenue for the last fiscal was higher than the budgeted revenues, and consequently Finance Minister Khalifa Hamada was able to claim to parliament in January 2021 a reduction of KD2 billion from the forecast KD14 billion budget deficit in fiscal 2020-21.

Using this tried and tested dissimulation, the budget presented by Minister Hamada for the current fiscal year 2021-22 is based on an oil price of $45 per barrel while Brent crude is expected to average around $54 per barrel this year according to oil analysts at the US-based media and financial news conglomerate Bloomberg News. This could result in higher actual revenues and thus enable the finance minister to pull out the proverbial rabbit and once again present a ‘trimming’ of the KD12 billion envisaged in the current fiscal.

However, what is often left unsaid during these parliamentary financial presentations is that since 2017 there has been an undercurrent in the form of lower oil production that has been towing away these presumed deficit reductions. A reduction in Kuwait’s oil production has been in place since the start of 2017, when the Organization of Petroleum Exporting Countries (OPEC) and its new-found allies among non-OPEC oil producers, decided to cut overall global oil production in a bid to salvage, rebalance and boost sagging international oil prices.

For instance, in the previous budget for fiscal year 2020-21, oil production was assumed to be at 2.5 mb/d, however, the actual production during the first nine months of the fiscal year averaged only 2.339 million barrels per day (mb/d). This lower-than-budgeted oil production resulted in a smaller-than-expected oil revenue in the fiscal year 2020-21. On a similar vein, Kuwait’s fiscal year 2021-22 budget is based on an oil production of 2.425 mb/d, as against the prevailing production level of 2.295 mb/d, as per data from the monthly oil market report by OPEC, and in compliance of additional OPEC cuts announced since May 2020.

The lower-than-expected oil production volumes often offset the touted budget deficit reductions that result from higher-than-budgeted oil prices. However, these deficit cuts hardly make a dent. According to estimates by S&P Global Platts — an international provider of information on energy and commodities — based on the current expected revenues and expenditure, Kuwait would require a breakeven oil price of US$ 90 per barrel to balance its budget. Moreover, figures released by the Kuwait Central Statistical Bureau (CSB) show that Kuwait’s economy contracted by 8.9 percent in 2020, which was the steepest fall since the global financial crisis of 2008-2009. The economic contraction witnessed was also uncharacteristic in that both oil and non-oil sectors declined equally by around 8.8 percent in 2020.

According to economic analysts at the National Bank of Kuwait, the leading commercial lender in the country, the year 2020 was an extremely challenging year for the economy due to the ongoing COVID-19 crisis. The non-oil economy witnessed the most severe contraction, which was also the sharpest among non-oil sectors in the six-nation Gulf Cooperation Council (GCC) countries. The sector’s real output was back at levels last seen in 2014, when oil prices plummeted to record lows and brought economies in the region to a virtual standstill.

Meanwhile, oil sector GDP declined for the second year in a row in 2020. With oil demand ravaged by the pandemic and prices plummeting to multi-decade lows last April. Besides lower oil prices, the country’s average targeted output cut in 2020 rose to 0.56 mb/d, or a 20 percent reduction from a reference level of 2.809 mb/d achieved in late 2016 when the OPEC production cuts were negotiated and agreed upon. Kuwait has consistently complied with its mandated production cut achieving a compliance rate of 101 percent in 2020, and resulting in crude output averaging 2.44 mb/d for the year as a whole, said NBK.

The economic outlook has improved in recent months, with vaccination efforts gathering pace and an easing of partial curfews. However, underpinning the rebound will be government spending, the lynchpin of Kuwait’s economy since oil exports began decades ago. Finance Minister Hamadah, while passing the budget on Tuesday, promised that around 15 percent of the envisaged total spending in the budget has been earmarked for development projects, including infrastructure and residential buildings.

The semantics and data sophism presented in his budget notwithstanding, it needs to be admitted that the finance minister deserves praise for passing the 2021-22 budget through a bellicose parliament. Using the power of the fist and the igal to settle disputes and stymie dissent is as undemocratic a behavior as it can get. Debating and dissenting on issues, arriving at amicable consensus, or failing which, politely agreeing to disagree, are hallmarks representing the normative bed-rock of democratic parliamentary life. Parliamentarians who swear by democracy and the freedom of speech at every opportunity, apparently cast all that aside at the drop of aphoristic hat, or in this case the ghutra.

Dissent is essential in a democracy, it could even be considered a crucial criterion of democracies worldwide. It is only through discussion, disagreement and dialogue that we can find better and more efficient ways to run the country. The use of igal to settle issues harks back to a time before the discovery of oil, when this versatile piece of accessory to the attire was used to drive sheep for grazing and to goad them to the slaughters.

But what was even more bewildering than the lawless behavior by lawmakers was the lack of indignation and condemnation of this egregious display. Citizens who pride themselves on having the sole parliamentary form of governance in the region; the media doyens who at every pretext underline the virtues of freedom of speech; and, the innumerable self-appointed guardians of moral rectitude in society, were all sadly silent on the belligerent antics of their representatives. There was no righteous indignation being forwarded or tweeted and retweeted on social media against attempts to subsume the vaunted freedom of speech; celebrities and political analysts did not appear on talk shows to express their displeasure and disdain at the free-for-all in parliament.

Public indifference to the ignominy they witnessed on Tuesday could be the result of weariness from watching repeated replays of the charade that constitutes democratic life in Kuwait. The deafening silence could also probably be a thin veneer hiding the frustration, angst and vitriol broiling beneath the surface among the public. The people are apparently speaking loudly with their silence; if only the lawmakers would listen.

 

 

SOURCE  TIMESKUWAIT

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