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Volume :17 Issue : 65 1992      Add To Cart                                                                    Download

PUBLIC BUDGET DEFICIT INKUWAITCAUSES, RESULTS AND SOLUTIONS

Auther : Dr. Yousef H. El-Ebraheem

 

         The increasing role of the government in the economic activities has resulted in a high growth rate in the public expenditure levels.  Fortunately, this has been accompanied by a higher increase in the oil revenues.  However, in the early eighties these high levels of oil revenues began to recede, which led to a deficit in the public budget.

         The purpose of this paper is to delineate the main variables that cause the level of budget deficit and analyse its impact on the economy.

         To reach this objective, the study reviews the structure of the public budget for the period 1970/1971 – 1989/1990, and the methods used to finance the deficit since 1981/1982.  It also forecasts the deficit levels till the end of this century.

         The study argues that the continuation of the budget deficit will have negative impact on the economy in the long-run.  This is represented by deterioration in the country’s foreign reserves, a high interest rate, decline in private investment and high cost of public debt.

         In conclusion, the paper presents a theoretical financial framework, “Asset Management Framework”, that determines the structure of the government finance and its assets and liabilities over a period of time exceeding one fiscal year.  The objective of this framework is to improve the financial decision making process in Kuwait’s public sector.

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