The Kuwaiti cabinet on Sunday appointed Mohammad Al Hashel as a new governor of the central bank to replace the previous chief who quit last month, Finance Minister Mustafa Al Shamali said.
Hashel, who has been the deputy governor for several years, was promoted to acting governor last month after former central bank chief Shaikh Salem Abdulaziz Al Sabah resigned.
Shaikh Salem said public spending had increased to unprecedented and unsustainably high levels, restricting the central bank’s ability to achieve fiscal and monetary stability.
Buoyed by 12 consecutive years of large budget surpluses thanks to high oil prices, spending has more than tripled over the past six years from just $23 billion to over $70 billion, mostly on wages, subsidies and grants, according to official figures.
The government has proposed a 13 per cent increase in spending to $79 billion in the next fiscal year starting April 1.
Kuwait receives around 95 per cent of its public revenues from oil income.
Last week, the Gulf state was hit with industrial action by workers at various institutions demanding a wage hike to cope with the rising cost of living.
At a special parliamentary session held last Thursday to discuss the workers’ demands, the government warned that the country’s economy was at risk if wages continued to rise unchecked.
Kuwait, with a native population of 1.17 million, provides a cradle-to-grave welfare system with services and fuel offered either at heavily-subsidised prices or for free and there is no taxation.