KUWAIT: Finance Minister Anas Al-Saleh yesterday announced that the Cabinet has approved a six-point financial and economic reform plan prepared by the Cabinet’s economic affairs committee. Speaking at a press conference alongside Minister of Social Affairs and Labor and Planning Hind Al-Subaih and the Minister of Commerce and Industry Yousef Al-Ali, Saleh said the plan includes a 10 percent tax on profits of companies.
The Cabinet also approved re-pricing some commodities and public services, he said without elaborating. Saleh added the government would seek to privatize some state-owned projects, including airports, ports and some facilities of Kuwait Petroleum Corporation (KPC), though not the main oil sector.
Corporate taxes are currently levied at different rates for local and foreign companies, although most Kuwaiti companies do not presently pay taxes on income. Other charges are levied though – some firms must pay an employment tax and make mandatory contributions for zakat, or Islamic alms, and for a scientific research foundation.
Saleh, who is also the acting oil minister, told the press conference that the country welcomed coordination between OPEC and non-OPEC countries, but insisted priority was a consensus.
He said he had not yet received an official invitation to any meeting in Moscow or Qatar. Russian Energy Minister Alexander Novak said earlier yesterday that a global deal to freeze oil production could be signed in April and exclude Iran, which has the right to boost output after years of sanctions. A final agreement on an output freeze to support oil prices, which have fallen 65 percent since peaking in June 2014 due to oversupply, is seen next month, possibly again in Doha, Novak said.
The six-point reform document Saleh presented to the Cabinet during its weekly meeting yesterday includes 41 short and medium-term programs, Minister of State for Cabinet Affairs Sheikh Mohammad Al-Abdullah Al-Sabah said in a statement following the meeting. It is mainly based on boosting non-oil revenues, cutting public spending in order to reduce the budget deficit, redraw the state’s economic role so that it could gradually turn from production to organization and supervision over economic activities, and reactivating the private sector’s economic role, the minister said.
It also includes allowing people to own privatized projects at a rate of 40 percent and public-private sector joint ventures at a rate of 50 percent, reforming the labor market and civil service system with a view to ensuring justice among workers, improving job performance, boosting the public sector’s efficiency by linking pay to production and maintaining stable living conditions, as well as launching administrative and institutional reforms by means of upgrading the efficiency of general and financial administration, Sheikh Mohammad said.
Central Bank of Kuwait Governor Mohammad Al-Hashel briefed the cabinet on local economic challenges through four aspects involving economic, financial, monetary and bank conditions, the Central Bank’s role, the state’s sovereign credit rating and financial and economic reforms. He reassured that the current monetary and bank positions are “safe and solid”, noting that the Kuwaiti dinar exchange policy which is based on pegging the dinar to a basket of main world currencies marks the main framework of the Central Bank’s monetary policy.
He reiterated the bank’s firm commitment to the dinar exchange policy in a way that ensures its stability and purchasing power, citing relevant positive reports by world agencies, primarily the International Monetary Fund (IMF). However, the governor stressed the significance of stepping up efforts to put financial and economic reform programs in place.
By Meshaal Al-Enezi