Kuwaiti oil revenues rocket (page 2 of 2)

This probably explains why the rise in spending stemmed mostly from emergency expenditures, spending on fuel used in power generation, capital projects, and, to a smaller extent, from the increase in military wages and salaries.

Excluding scaled back spending on military procurement and transfers to public institutions, spending grew by a higher 7%, yet still below the projected increase of 9%. Wages and salaries make up 32% of total expenditures.

Other large employment-related items are listed under Transfers and Miscellaneous Expenditures, such as transfers to the Public Institute for Social Security (PIFSS), military wages and salaries, and National Labor Support.

These employment-related items in addition to wages and salaries, which therefore cover roughly 60% of total expenditures, reveal an increase of 1.3% over last year. The increment was driven by a rise of 3.2% in military wages and salaries and 50% in National Labor Support. Transfers to the Public Institute for Social Security (PIFSS) remained at last year's level.

The NBK report adds that transfers and miscellaneous expenditures, which constitute more than half of total government spending, rose by 3.6% following a slight drop the year before. Ignoring transfers to the PIFSS, military wages and salaries, and National Labor Support, expenditures under this chapter rose by 5%.

This was largely due to spending KD 96 million from the KD 500 million emergency budget related to war in Iraq, which was approved towards the end of FY02/03. The closing account for FY 02/03 shows that KD 20 million was spent from this emergency budget last fiscal year.

By January 2004, emergency spending alone accounted for 71% of the increase in total expenditures. Countering the increase in emergency spending was a drop of KD 35 million or 19% in military procurement this year, while this item was to increase by 36%.

Spending on goods and services rose by 13% or KD 32 million during the period. Actual expenditures covered about half of the budget allocated for the period, in line with last year.

The Ministry of Electricity and Water, whose purchases mostly reflect fuel cost for power generation, recorded almost half of expenditures under this chapter, up by 19% from last year. This growth was driven by a combination of higher oil prices and growing electricity consumption.

NBK reports that spending on projects and maintenance rose by 15%, yet slowed down from the previous fiscal year. Spending growth came mainly from the Ministry of Public Works followed by the Ministry of Electricity and Water, and the Ministry of Communications, which reported respective increases of KD 16 million, KD 8 million, and KD 7 million.

Both this chapter and transfers tend to see significant upward adjustments in the closing accounts. Nevertheless, the fact that actual spending covered only 34% of the allocated budget for the period reflects significant slippage in the implementation of projects.

In light of the alarming news about potential power and water shortages in the near future, such evidence of poor implementation of planned projects is not comforting.

Besides, talk about the need for a new power station has been echoing for years, while no clear and definitive plans about the method and timing of implementation have emerged. With proper planning and execution, such problems should not arise.