Kuwait gives each citizen Dh13,000 and free food

Gifts mark anniversaries of independence, liberation from Iraqi invasion and Sheikh Sabah coming to power, as economist warns inflation rate will leap as a result.

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KUWAIT CITY // Kuwaiti citizens will each receive a grant of 1,000 Kuwaiti dinars (Dh13,000) and free food staples for 13 months to mark three major anniversaries, a government statement said.

Roudhan al Roudhan, the minister of state for cabinet affairs, said after the cabinet's weekly meeting on Sunday that the grant reflected the desire of the emir, Sheikh Sabah al Ahmed al Jaber al Sabah, to help citizens improve their living conditions, the state news agency, Kuna, reported. The minister said all citizens will be entitled to the grant.

Sheikh al Sabah ordered the grant to mark three celebrations in February: the 50th anniversary of independence, the 20th anniversary of liberation from the Iraqi occupation and the fifth anniversary of his coming to power.

Foreign workers, who make up about two thirds of the country's population of 3.1 million, are excluded from the largesse.

Members of parliament, who often push for public-sector pay rises, higher pensions and government acquisition of citizens' debt, welcomed the plan yesterday but warned against traders who might profiteer when the money floods into the economy.

One MP, Faisal al Duwaisan, the local press reported, said: "It isn't surprising that his highness, the emir, resorts to such a parental, caring gesture by granting 1,000 dinars to every citizen. But I demand that the government restrains the expected price rise so that the grant doesn't turn into a plight."

As part of the gift, Kuwait's system of food rationing, where citizens can buy staples, such as rice, oil, chicken or milk, wholesale at cut prices in co-operative societies, will offer supplies free of charge from next month to March 31, 2013.

Kuwait sits on around nine per cent of the world's oil, and food rationing is just one way in which the state distributes its prodigious wealth. Kuwait was ranked as having the eighth-highest gross domestic product per citizen while taking the cost of living into account in 2010, according to the CIA's World Factbook.

The majority of employed Kuwaiti citizens have jobs in the public sector and are entitled to benefits such as low-cost land, interest-free housing loans, and free education and health care.

Abbas al Mejren, an economist at Kuwait University, said the government has a limited ability to control the price rises that are expected to come in the wake of the windfalls, and he expects prices to start their upward spiral as soon as tomorrow.

"Usually, when you have given much less to employees - not to every citizen - there is a big effect on the inflation rate," he said. The country's annual rate of inflation could escalate to as much as 11 per cent from its current level of around three to four per cent, he said.

Free food rationing will encourage more families to use the system and encourage "irrational" consumption of the goods on offer, Mr al Mejren said, adding that the price rises on other products will be borne by all of the country's population because inflation "does not differentiate between Kuwaiti and non-Kuwaiti".