Kuwait investment plan stumbles in parliament

Reuters News
Posted: Apr 25, 2012 11:10 AM
Kuwait investment plan stumbles in parliament

KUWAIT (Reuters) - Kuwait's National Assembly rejected a draft bill on the country's 30 billion dinar ($108 billion) development plan on Wednesday as opposition deputies accused the government of failing to make progress on the major investments it provides for.

The plan, spread over four years until 2014, provides for a series of huge infrastructure projects including a new airport terminal, new oil refinery and hospitals and is aimed at diversifying an economy heavily reliant on oil.

Details of the plan must be voted on each year and parliamentarians rejected the part of the plan for the 2012-2013 fiscal year on Wednesday. There is a separate plan for the budget.

Opposition parliamentarians and analysts say that the government has only completed small parts of the plan such as work on roads and bridges but has failed to push forward with the major projects which would attract international companies.

"There are no real projects in the plan," opposition deputy Khaled al-Tahous said, accusing the government of corruption. Deputy Premier Sheikh Sabah al-Khaled al-Sabah rejected this.

Government officials say the plan is making progress, pointing to interest from international companies for the future large tenders.

The Minister of Works said last month that Kuwait would launch an initial tender for construction of a second terminal at its international airport soon, a project worth around 700-800 million dinars.

The OPEC member state also plans a 4 billion dinar tender for a new refinery and upgrades on existing plants, although this project has been subject to several delays.

Top Kuwaiti policymakers and officials from institutions such as the World Bank have stressed the need to correct imbalances in the economy and axe budget waste through the long-delayed diversification plans.

While the cabinet's 15 members backed the plan for this year, the government failed to win over enough National Assembly members to have a majority on Wednesday.

"There are a lot of reservations about it," economist Amer al-Tamimi said, referring to the plan, which he said must address imbalances.

"How many of the projects in the plan have been accomplished? Not more than 50 percent at the best. It depends on the sector and the project."

Political wrangling has held up development in the country of 3 million, one of the world's top old exporters and a former economic trail-blazer in the region.

A snap election in February brought in Kuwait's fourth parliament in six years, with opposition Islamist MPs making gains. A series of attempts to question senior government ministers has highlighted deep divisions in the new legislature.

(Reporting by Mahmoud Harby and Ahmed Hagagy, Writing by Sylvia Westall; editing by Patrick Graham)