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Mon 9 Jun 2008 06:05 PM

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MPs pile pressure on gov't over soaring inflation

Kuwaiti lawmakers calls for gov't to raise state salaries and affordable food supplies.

Kuwaiti lawmakers piled pressure on the government on Monday to raise state salaries and secure affordable food supplies when it unveils an action plan to battle record inflation.

Prices have become a hot political issue in the oil exporter. Soaring food and housing costs pushed inflation to 10.1 percent in February, the most recent published figure.

Commerce and Industry Minister Ahmad Baqer plans to unveil measures to combat price increases at a session of the new parliament on Tuesday, after deputies demanded immediate action.

It will be the big first test for the new government in dealing with parliament's demands since Kuwait's emir dissolved the assembly earlier this year to end a row with the cabinet that had brought legislation to a halt.

"A rising number of Kuwaiti families have only a limited income as a result of the rising prices," Islamist deputy Jaaman Al-Harbish told reporters.

"There is a need to work out a plan to support food security by encouraging investments... inside and outside Kuwait, because the crisis of price increases will continue and is likely to last a long time."

His Islamic Constitutional Movement urged the government to raise subsidies for basic foodstuffs significantly; to include foreign workers in state aid schemes; to scrap import duties on food products; and to work out a national food strategy.

The liberal Popular Action Bloc demanded the government approve another increase in salaries in the public sector, where more than 90 percent of Kuwaitis are employed.

The government raised state salaries in February. Demands by deputies for another increase led the cabinet to resign in March, which in turn led to the dissolution of parliament.

Inflation has hit record or near-record levels across the world's biggest oil-exporting region.

Kuwait broke ranks with its Gulf neighbours and cut its link to the dollar a year ago, saying the currency's weakness was making imports too expensive. But inflation has kept rising.

Like other Gulf countries, Kuwait imports most of its food. Some of its neighbours are already looking to invest in farming countries such as Brazil, Thailand or India to boost their own food security.

While Kuwait's relatively small population of around 3.3 million faces little danger of hunger, its relatively open political system means the government faces more popular pressure than in more autocratic Gulf Arab states.

Baqer told the state news agency KUNA last week that his ministry would clamp down on price rigging and increase subsidies for basic commodities.

The Al-Watan newspaper said the government had drawn up a list of 100 products including rice, milk, cheese, fish and baby food as candidates for government subsidies.

Inflation will average at least 9 percent in most Gulf Arab states this year, a poll by newswire Reuters indicated last month. (Reuters)