Kuwait
Technical Assistance Report-Government Finance Statistics
Author:
International Monetary Fund. Statistics Dept.
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Publication Date:
20 Nov 2018
eISBN:
9781484384336
ISBN:
9781484384336
Language:
English
Keywords:
ISCR; CR; GFSM; CSB bulletin format; CSB website; TA mission; final accounts; MoF of the State of Kuwait
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In response to a request from the Central Statistical Bureau (CSB) of Kuwait, a government finance statistics (GFS) technical assistance (TA) mission visited Kuwait City, Kuwait during April 29–May 3, 2018. This first GFS TA mission from the IMF’s Statistics Department (STA) aimed to assist the CSB staff in compiling fiscal data according to the Government Finance Statistics Manual 2014 (GFSM 2014) and help them to issue this year’s GFS bulletin according to the GFSM 2014 classification. In addition, the mission discussed with the Ministry of Finance (MoF) the possibility of resuming the reporting of the GFS data to the Fund for surveillance and dissemination in Government Finance Statistics Yearbook (GFSY).

Abstract

In response to a request from the Central Statistical Bureau (CSB) of Kuwait, a government finance statistics (GFS) technical assistance (TA) mission visited Kuwait City, Kuwait during April 29–May 3, 2018. This first GFS TA mission from the IMF’s Statistics Department (STA) aimed to assist the CSB staff in compiling fiscal data according to the Government Finance Statistics Manual 2014 (GFSM 2014) and help them to issue this year’s GFS bulletin according to the GFSM 2014 classification. In addition, the mission discussed with the Ministry of Finance (MoF) the possibility of resuming the reporting of the GFS data to the Fund for surveillance and dissemination in Government Finance Statistics Yearbook (GFSY).

Summary of Mission Outcomes and Priority Recommendations

1. In response to a request from the Central Statistical Bureau (CSB) of Kuwait, a government finance statistics (GFS) technical assistance (TA) mission visited Kuwait City, Kuwait during April 29–May 3, 2018. This first GFS TA mission from the IMF’s Statistics Department (STA) aimed to assist the CSB staff in compiling fiscal data according to the Government Finance Statistics Manual 2014 (GFSM 2014) and help them to issue this year’s GFS bulletin according to the GFSM 2014 classification. In addition, the mission discussed with the Ministry of Finance (MoF) the possibility of resuming the reporting of the GFS data to the Fund for surveillance and dissemination in Government Finance Statistics Yearbook (GFSY).

2. The mission undertook the following tasks:

  • i. Reviewed the current various roles, responsibilities, data sources, and reporting systems in compiling GFS;

  • ii. Trained the CSB staff on the key principles of the GFSM 2014 methodology and compiling methods;

  • iii. Assisted the CSB in preparing the GFS Bulletin in line with the GFSM 2014, for both Economic and Functional Classifications;

  • iv. Reviewed and proposed an institutional framework for the compilation of GFS, instead of the current one which is based on a methodology that has become obsolete and inappropriate for fiscal policy analysis;

  • v. Worked for the development of a communication bridge between the CSB and the MoF in order to improve the efficiency and the quality of the flows of data;

  • vi. Agreed on a training program to enable the CSB to adopt the framework of the GFSM 2014, particularly with respect to the institutional coverage and transactions scope;

  • vii. Assessed the needs of the MoF for the STA’s technical assistance to enable the State of Kuwait to regularly report GFS data to the Fund for surveillance and dissemination in the GFSY;

In this respect, it should be noted that the CSB used to compile GFS data based on the GFSM 1986 methodology and following the MoF’s adoption, in 2016, of the GFSM 2001 methodology as a budgetary classification system, the source data no longer allowed the CSB to properly compile the GFS data for its Bulletin, for both economic and functional classifications.

3. Given that the source data are compiled according to the GFSM 2001 classification, the mission had to prepare a bridge table to allow the CSB to automatically derive the bulletin tables and statements. However, this work could not be completed during this mission because the CSB did not receive yet any data files on the new budget classification. Indeed, according to the CSB staff, the reason is that, until now, it has not been possible for them to integrate the new budget classification into their IT system due to the fact that the final accounts (source data) have been communicated to them recently and in an unusable format (PDF and paper).

4. The team with which the mission collaborated has a great ability to master the concepts and definitions of the national accounts, which allowed them to progress relatively quickly in assimilating the fundamentals of the GFSM 2014 methodology. However, since this team had never benefited from IMF training in the GFS field, the relatively short duration of this mission (one week) was insufficient to allow them to learn both the methodology and the GFS compiling methods.

5. As far as GFS data reporting to STA is concerned, the MoF stopped reporting data to the IMF for dissemination in the GFSY because of an organizational problem. In fact, the official who oversaw this function has left the concerned department and has not been replaced yet. Moreover, the mission identified a significant communication gap between the MoF and the CSB (in both directions), which substantially affects the quality of data exchanged.

6. Finally, the mission set up an implementation plan in cooperation with the CSB authorities as presented in the sub-section H.

To support progress in the above work areas, the mission recommended a detailed one-year action plan with the following priority recommendations to make headway in improving GFS data:

Table 1.

Kuwait: Priority Recommendations

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Further details on the priority recommendations and the related actions/milestones can be found in the action plan under Detailed Technical Assessment and Recommendations.

7. The Central Statistical Bureau (CSB) is the only statistical reference of the country. Indeed, in accordance with article 4 of the Law No. 27 of 1963 on Statistics and Census, the CSB is responsible, inter alia, for the collection of statistical information related to all the areas defined by the Planning Board, the supervision and coordination of statistical work carried out by ministries and other public institutions, as well as the analysis of statistical information and its dissemination. In this context, the CSB publishes, since 1981, a bulletin dedicated exclusively to GFS. This document, which draws its data sources from the final accounts published by MoF, presents the GFS data according to the GFSM 1986 economic and functional classification.

8. Given that the MoF has adopted the GFSM 2001 methodology as a budget classification system, the final accounts are presented, since the fiscal year 2015–2016, according to this classification, which has not allowed the CSB to continue production of its GFS bulletin as usual, and, therefore, requested Fund’s technical assistance.

9. The CSB is not directly concerned with reporting GFS data to the Fund, but given its major role in compiling macroeconomic statistics, this mission is of a particular importance; it should be considered as a support for improving the quality of macroeconomic statistics in general and GFS data in particular.

A. Mission Objectives and Tasks

10. The main objective of this mission aimed to help the CSB team to understand the key principles of the GFSM 2014 methodology and assist them to align the classification of the GFS bulletin with GFSM. In this regard, the mission closely collaborated with a qualified team under the leadership of Mrs. Samar Ateeqi, National Accounts Controller responsible for Government Finance Statistics, which led to a significant and rapid progress in understanding the basic principles of the GFSM methodology. Indeed, through their interaction with the mission, the CSB team has demonstrated its ability to implement the mission’s recommendations for the preparation and dissemination of the GFS Bulletin according to the GFSM 2014. To this end, the mission’s main tasks were:

  • a) Train the CSB staff on the key principles of the GFSM 2014 methodology, knowing that the methodology used by the CSB until last year was based on the GFSM 1986 methodology;

  • b) Assist this Department in preparing the GFS Bulletin in line with the GFSM 2014 recommendations, for both economic and functional classifications;

  • c) Review and propose an institutional framework for GFS compilation, instead of the current one which is based on a methodology that has become obsolete and inappropriate for fiscal policy analysis;

  • d) Develop a communication bridge between the CSB and the MoF in order to enhance the efficiency of data flows to meet GFSM 2014 standards;

  • e) Agree on a training timetable for the implementation of the necessary measures to enable the CSB to adopt the recommendations of the GFSM, particularly with respect to the institutional and transactions coverage;

  • f) In addition, the mission met the MoF officials in order to assess their needs for the Fund’s technical assistance to enable the State of Kuwait to continuously report to STA the latest GFS data for monitoring and dissemination in the GFS Yearbook.

B. Background Information

11. The CSB has not received technical assistance for several years. Designated by law as the official authority responsible for compiling and disseminating macroeconomic statistics, the CSB compiles and disseminates a bulletin devoted exclusively to GFS. However, both the methodology supporting the preparation of this bulletin as well as the coverage of transactions and institutional units have proved obsolete and, therefore, require upgrade in compliance with the latest international standards.

C. GFSY/IFS Reporting Status and e-GDDS Status

12. The MoF also used to submit data to STA for dissemination in the GFSY until FY 2015, but since then, it stopped reporting. The State of Kuwait does not currently report high frequency GFS data for publication in the International Financial Statistics (IFS) and does not participate in the enhanced General Data Dissemination System (e-GDDS).

13. The CSB is not directly involved in reporting GFS data to the Fund but given its major role in compiling other macroeconomic statistics, this TA work takes on great importance; it should be considered as a support for improving the quality of macroeconomic statistics in general and GFS data in particular.

D. Structure of the Report

14. The remainder of this report is divided into five subsections which discuss successively the legal and institutional environment, description of General Government, compilation of the GFS data, the MoF needs for training and TA, and a detailed action plan. Followed by the main tables (2–9) that have been prepared and presented by the mission as support for its work. In the same way, since the CSB has never used the COFOG classification according to the recommendations of the GFSM, a presentation in Arabic and English versions is given by Table 10, and an example of migration from its current classification to that of the GFSM 2001/2014 is included in Table 11.

Table 2.

Kuwait: Revenue Changes from the GFSM 2001 to the GFSM 20141

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The strike out text are items to be removed and reclassified as suggested in the comments column of the table.

Table 3.

Kuwait: Revenue Classification According to the GFSM 2014

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Table 4.

Kuwait: Expense Changes from the GFSM 2001 to the GFSM 2014

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Table 5.

Kuwait: Expense Classification According to the GFSM 2014

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Table 6.

Kuwait: Transactions in Nonfinancial Assets: Changes from the GFSM 2001 to the GFSM 2014

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Table 7.

Kuwait: Transactions in Nonfinancial Assets Classification According to the GFSM 2014

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Table 8.

Kuwait: Summary of Budgetary Central Government Operations

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Table 9.

Kuwait: Summary of Budgetary Central Government Operations: Fiscal years 2016–2017 and 2017–2018

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used by the mission from the summary statements presented in the final accounts

required detail is not available

Table10.

Kuwait: Classification of Functions of Government (COFOG)

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Table11.

Kuwait: Example of Migration from Current Classification to the GFSM 2001/2014 Classification

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Detailed Technical Assessment and Recommendations

A. Legal and Institutional Environment

15. The State of Kuwait is divided into six governorates, each of which is in turn divided into several areas, making a total of 131. The funding of the line departments is provided through the MoF. The budgetary year extends from April 1st to March 31st. Budget preparation and approval starts in January when the MoF distributes budgetary guidelines to ministries and departments. These guidelines include suggestive aggregate spending ceiling for each ministry and instructions on how to prepare spending estimates in a way that is consistent with macroeconomics objectives.

16. According to Article 140 of the Constitution, the general budget must be prepared and submitted to the National Assembly at least two months before the end of the previous fiscal year. The budget document, which is published after its adoption, gives detailed information on the revenue and expenditure by administrative departments, and also presents the budget according to the GFSM 2001 economic and functional classifications. However, the mission noted some differences between the currently used classification and that of the GFSM 2001.

B. Description of General Government

17. The fiscal data are presented according to three categories of accounts: General Budget, Attached Budgets, and Independent Budgets. The General Budget covers the activities of central government ministries and departments; the Attached Budgets comprise the operations of the agencies which provide government-type services but have limited own-revenues; and the Independent Budgets cover the activities of agencies which are generally profit making.

18. From a statistical point of view, this presentation, which meets strictly Kuwaiti budgetary needs, should be revised to allow an institutional coverage in line with the recommendations of the GFSM 2014. In this regard, while highlighting basic concepts and the tree structure of the general government sector according to the manual, emphasis was placed on the need for the CSB to procced to the institutional classification of the units forming the three previous budget categories. To this end, the CSB should identify which of these units are institutional units and which among them are engaged in market / non-market activities in order to form an appropriate coverage of the central government, knowing that the state of Kuwait does not have local governments that enjoy sufficient financial autonomy. Thus, several explanations on the sectorization of the public sector have been provided with a focus on General /Central Government coverage:

Figure 1.
Figure 1.

Sectorization of the General Government in Kuwait.

Citation: IMF Staff Country Reports 2018, 313; 10.5089/9781484384336.002.A001

Recommendation: The mission recommends that the CSB proceed as soon as possible to the classification of budgetary units (Central Government Budgetary accounts, Attached budgets, and Independent Budgets) according to the GFSM 2014 methodology. This classification is all the more necessary for the CSB as it should make it possible to establish more consistency between its GFS Bulletin and the national accounts. The Institutional units list should be updated regularly and at least once a year.

Recommendation: The mission also recommends that once the institutional classification has been completed, the CSB should finalize the appropriate data for the Central Government sector (BCG, EBF, and SSF).

C. Compilation of the GFS Data

19. The main objective of the mission was to train the CSB officials on the GFSM 2014 methodology and assist them in setting up a bridge table to enable them to prepare and publish the GFS Bulletin according to the GFSM methodology. In this respect, it should be noted that the GFS Bulletin has always been prepared and published in accordance with the GFSM 1986 classification. To this end, the mission met with Mr. Othman Abdullah Al-Othman, Undersecretary for Statistical Affairs Sector / Director General of CSB, and worked closely with Mrs. Samar Al-Ateeqi, National Accounts Controller / Responsible for Government Finance Statistics, and her team. The mission also met with representatives from MoF in order to assess the ministry’s needs for the Fund’s technical assistance.

20. During its stay, the mission closely collaborated with a highly qualified team, which led to a significant and rapid progress in understanding the basic principles of the GFSM methodology. Indeed, through its interaction with the mission, the CSB team demonstrated its ability to implement the mission’s recommendations for the preparation and dissemination of the GFS Bulletin, according to the GFSM 2014.

21. The MoF of the State of Kuwait has adopted the GFSM 2001 as a classification system for the general budget. This reform came into effect starting from the fiscal year 2016–2017. Since then, the CSB receives the data from the MoF according to the new classification (GFSM 2001).

22. The mission made several presentations on the methodology, both conceptually and practically. The Kuwaiti authorities expressed great satisfaction with the presentations and the ensuing discussions. It should be noted, in this regard, that this team received training on the GFSM methodology for the first-time.

23. In practice, and with regard to the economic classification, instead of reclassifying the final accounts—issued by the MoF since last year according to the GFSM 2001 classification—to the current CSB bulletin format—inspired by the GFSM 1986 methodology—and then reclassify it in a second phase to obtained results according to the GFSM 2014 classification, it was agreed that the CSB abandon the methodology of the GFSM 1986 and proceed to the reclassification of the source data according to the classification of the GFSM 2014.

24. With regard to the functional classification, it became clear that it would be quite appropriate for CSB to use this classification as it appears in the source data (because COFOG classification did not change compared with the GFSM 2001), while working to determine the level of detail that best suits its needs. In this regard, the CSB team agreed to use in the GFS Bulletin the COFOG classification as it appears in the source data, while seeking to determine the required level of detail.

25. In this regard, it should be noted that the CSB receives data from the MoF in PDF format or in paper support, which makes impossible the use of these data by the CSB as required. However, the MoF and CSB have been working to resolve this IT difficulty. Thus, given that the MoF last fiscal year published its final accounts for the first time in accordance with the methodology of the GFSM 2001, the CSB has not yet entered the new classification in its IT system and, therefore, has not been able to provide the mission with the required data in electronic form for preparing the bridge tables. However, given the similarity between the two methodologies (2001 and 2014), all the necessary adjustments to harmonize the two classification systems have been explained.

26. Indeed, the mission prepared and presented a detailed document (see tables 2–7) that explains all the changes from the GFSM 2001 to the GFSM 2014 classifications for revenue, expense, and transactions in nonfinancial assets. This document, with its full details, was delivered to the CSB team.

27. In addition, in order to define the analytical framework, the accompanying tables must be included in the GFS bulletin. The CSB team chose a similar statement to the statement 4.2 of the GFSM 2014, and temporarily entitled it “Summary of Central Government Budget Operations” (see table 8), and also considered that it would be appropriate to use the GFSM 2014 tables for revenue, expense, and transactions in non-financial assets. Then, the mission prepared with the team a concrete case study for the budgets 2016–2017 and 2017–2018 (see table 9).

D. The MoF Needs for Training and Technical Assistance

28. The MoF used to submit data to the Fund for surveillance and dissemination in GFSY until FY 2015, but since then it stopped reporting data to the IMF. One of the objectives of this mission was to examine with the authorities the reasons which have prevented the continuation of this collaboration with the Fund and to assess the needs of this Ministry for technical assistance.

29. The reason behind the interruption of submitting GFS data to the IMF for surveillance and GFSY purposes is mainly due to the departure of the staff member who was in charge of this function, but according to the MoF officials, this shortcoming will be resolved shortly.

30. The MoF could use an IMF TA to develop the abilities of its staff to review the budget classification on an ongoing basis, and to become familiar with the best practices of compiling and disseminating GFS. This TA should help the MoF to comply with the international standards in this area, notably to observe the GFSY and SDDS criteria.

31. Furthermore, it was found that there was a real need to strengthen the channels of collaboration between CSB and the MoF, as well as with the Central Bank of Kuwait (CBK), to foster the exchange of financial and economic data, and also to better coordinate regarding the methodological issues related to the GFS field.

E. Kuwait: Action Plan for Developing GFS Data

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Appendix I. OFFICIALS MET DURING THE MISSION

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Cover IMF Staff Country Reports
Kuwait: Technical Assistance Report-Government Finance Statistics
Author:
International Monetary Fund. Statistics Dept.
Volume/Issue:
Volume 2018: Issue 313
Publisher:
International Monetary Fund
ISBN:
9781484384336
ISSN:
1934-7685
Pages:
41
DOI:
https://doi.org/10.5089/9781484384336.002
Figure 1.

Sectorization of the General Government in Kuwait.