Kuwait's oil boom continues (page 2 of 2)

Coincidentally, these were also the areas that accounted for most of the spending increases in the previous fiscal year.

The drop in Transfers was mainly on housing loan forgiveness following an unusually large allocation in the previous fiscal year and a smaller drop in transfers abroad. Excluding these two items, the rise in government expenditures would come to 8.3% in the current fiscal year versus 15.9% a year ago.

òSpending on goods and services, a major contributor to overall spending increases in recent years, dropped by 14.4%. The drop arose primarily at the Ministry of Electricity & Water after several years of substantial spending increases on fuel for power generation.
Employment-related spending continued to dominate the budget representing 60% of total expenditures.

This includes wages and salaries in Chapter 1, wages of military personnel categorized in chapter 5, transfers to the Public Institution for Social Security (PIFSS) and expenditures as per the national labor support law.

Growth in employment-related spending was relatively high at 9.9%, though the pace of growth was slower than last year. Wages and salaries under Chapter 1 increased by 4.8%; wages and salaries of military personnel rose by 9.6%; while transfers to PIFSS continued to accelerate growing by roughly 20%.

NBK reports that overall, transfers to public institutions rose by 18% following a 6% decline in the previous year, notwithstanding the drop in housing loan forgiveness and transfers abroad. The final tally is likely to undergo large adjustments.

Capital expenditures rose markedly, up 23% (KD 50 million) compared to the same period last year. Much of the increase in capital expenditures was at the Ministry of Public Works and at the Ministry of Electricity and Water.

Still, spending was well below budget running at a rate of 40%. The spending rate is expected to be significantly higher by the close of the year as adjustments are expected to push it above last year's 70% rate.

Military procurement, expenditures on military equipment and hardware increased by KD 47 million or 30% following a substantial increase in the previous year. The KD 202 million reported spent during FY02/03 is about 1% above the budget projection for the period and could end up higher in the closing accounts.

In March, the National Assembly approved a supplemental appropriation bill worth KD 500 million in defense expenditures associated with the war on Iraq. The amount is likely to be spread between FY02/03 and FY03/04, if not beyond. It's full impact on last year's budget outcome is not clear at this point in time.