Kuwait's public finances strong (page 2 of 2)

The increase of KD 159 million, was double that for the previous year. Actual spending stood at 71% of the prorated budget for the period.

Nearly half of the growth was in wages and salaries, though other chapters also saw healthy growth. Excluding spending on military procurement and transfers to public institutions, spending growth was a higher 11%.

Overall, employment-related spending, which tends to cover two-thirds of total expenditures, grew by 3.3% over last year, mostly due to strong growth in wages and salaries, which increased by 7.1%.

Meanwhile, transfers to the Public Institute for Social Security (PIFSS) declined by 5.1%. The latter may not be indicative of a trend, however, as reporting delays are quite common in interim reports.

Strong growth in wages and salaries at ministries and attached bodies came mainly from the Ministries of Education and Public Health, which reported increases of 19% and 15%, respectively. The Ministry of Interior, meanwhile, experienced a drop in spending on wages and salaries, which declined by 7.7% during the period.

The NBK report adds that transfers and miscellaneous expenditures, which constitute over half of total government spending, grew by 1.5%, following a substantial drop the previous year. The increase was driven by the KD 88 million spent on emergency measures related to heightened security during the war in Iraq.

These expenditures received a KD 500 million budget allocation early in 2003 to be spent between FY02/03 and FY03/04.

The rise in miscellaneous expenditures was partly reversed by a KD 40 million drop in military procurement and a KD 26 million decline in transfers to public institutions, primarily to the PIFSS. Transfers abroad were also reduced by 20%. Expenditures related to the National Labor Support Program increased considerably growing by 68% during the first nine months of the fiscal year.

The NBK brief reports that spending on projects and maintenance rose by 21%, accelerating from the previous fiscal year. About 32% of the allocated budget for the period was spent thus far in the fiscal year.

Spending growth was mainly between the Ministry of Electricity and Water and the Ministry of Public Works, with the two ministries receiving increases of KD 10.7 million and KD 18.3 million, respectively. There was also strong growth in development spending at the Ministry of Communication.

Spending on goods and services rose by 15% during the period. Rising fuel costs are likely to explain most of this increase, as the Ministry of Electricity and Water was the largest spender on power generation. Higher oil prices and growing consumption of electricity are primarily behind this growth.