August 2023

The Kuwaiti Progressive Movement warns of the danger of the recommendations of the International Monetary Fund addressed to the Kuwaiti government

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The IMF is not, as it is being promoted, a global economic institution that seeks to achieve growth and prosperity on a sustainable basis for all its member countries, but it is one of the remnants of the Cold War that moves within the framework of the vision and interests of the major capitalist countries, headed by the United States of America, where the fund works to strengthen the global capitalist system. This is done by intervening in times of severe financial crises when governments lend to them in exchange for imposing so-called “structural reforms” on their economies, and these so-called “reforms” are a consecration of an extreme form of capitalism called neoliberalism, which widens class inequality and increases the dependence of poor countries on the big capitalist countries and their companies, blocks the way to independent national development options, and drags crisis countries into more debt and dependence abroad.

Yesterday, the International Monetary Fund published the so-called “assessment of the fund’s experts” about its annual consultations in Kuwait, and what concerns us in this assessment are those recommendations addressed by the fund to the Kuwaiti government, especially those recommendations formulated sometimes in euphemistic and twisted terms, if followed, it will push Kuwait towards more dependence on foreign capital, towards more control and acquisition of the influential parasitic capitalist oligarchy, and more suffering for the popular strata of Kuwaiti society.

Among such serious recommendations with bad economic, social and political consequences are:

1- A recommendation to increase state revenues by imposing a Value-Added Tax, a socially unfair tax that generally does not distinguish between rich and poor consumers.

2- A recommendation that “spending measures focus on reducing the wage bill,” and this recommendation means one or both things together: the first is to reduce the salaries of government employees and pensions of retirees, which have not been increased since the year 2012, and the other is to reduce or stop employment in the government sector to reduce the first part of the budget, while private sector companies are fighting National Employment and deliberately marginalizing them to maintain their ugly class exploitation of resident labor deprived of Social Security and trade union rights.

3- A recommendation calling for the” gradual elimination of energy subsidies, ” this recommendation is aimed at increasing electricity, gasoline, and gas prices, which would not only charge energy consumers more when paying their bills, but an increase in energy prices would most likely lead to double inflationary effects in the form of raising the prices of many goods and services.

4- Recommendation of the so-called mitigation “improvement of targeted income support measures”, which in practice means reconsidering subsidies by changing their form, reducing some of them or canceling them altogether, and may lead to a reduction in the net number of beneficiaries of support and their identities, it does not necessarily have to be done taking into account social justice.

5- A recommendation calling for ” reforms in the labor market to strengthen the wage structure so that it is compatible with the market. In particular, wages and working conditions should be gradually harmonized at the level of the public and private sectors, and efforts should be made to continuously harmonize labor market policies applied to citizens and expatriates.” This recommendation does not aim at increasing the wages of private sector workers or increasing the wages of resident workers, but rather to prejudice the salaries and wages of citizens working in the government sector to match the wages of the private sector and the wages of residents, or rather to match the interests of business owners and companies.

6- A recommendation requesting “easing the restrictions imposed on foreign ownership of companies,” and this recommendation is clear in its aim to give liberty to foreign capital in owning Kuwaiti companies without clear controls to further consolidate foreign domination over the national economy and deepen the subordinate link of the Kuwaiti economy with the global capitalist economy subject to major countries.

7- A recommendation that falsely calls for “improving the mechanisms for allocating public lands for longer lease periods for commercial development”, the real goal is to expand the scope of foreign and local private sector acquisition of state property with fewer controls and usufruct allowances or low rents and keep it under their control for long periods.

8- The IMF has been criticizing what it calls the “impasse” and the “political stalemate between the government and the National Assembly” because it hinders the implementation of urgent economic reforms, but the danger in the matter is that the fund does not mention who caused what it calls the”impasse” and “stalemate” nor how to address them, which opens the door to undemocratic treatments under the pretext of the requirements of economic reform.

We in the Kuwaiti Progressive Movement, when we highlight the reality of these recommendations submitted by the International Monetary Fund, we call for insight into the situation of many countries of the world that followed those recommendations and reflected negatively not only on their economies but also on their social and political conditions and the living conditions of their citizens. At the same time, we can agree with some of the obvious recommendations made by the IMF, such as the need to “increase non-oil revenues” and”expand the scope of corporate income tax to include domestic companies,” but these are recommendations that we do not need consultations with IMF experts to know.

We even wonder how the IMF experts ignore the simplest facts that the average Kuwaiti citizen knows about the causes of the economic deterioration in Kuwait and the priorities of reform. The most important reasons are: the narrow class interests of influential social forces, financial and administrative corruption, poor efficiency of Public Administration, and the lack of accountability for those responsible for the economic deterioration. The most important priorities include: housing, which means the need to reduce the prices of residential and commercial vouchers and construction prices, rescue the deteriorating educational and health sectors, and create serious and productive jobs in the government and private sectors. How come the IMF does not announce any of these reasons and priorities despite claiming that its consultations with countries are based on the assessment of objective, non-politicized experts The answer is that the IMF has a narrow and a priori neoliberal capitalist perspective on problems and solutions, but the responsibility is for each country to determine for itself its own national interest and not get carried away with such external perceptions that are detached from reality and have proven to fail again and again.

Kuwait 24th of August 2023