KUWAIT CITY, Feb 10: The recent unveiling of the government’s work program has highlighted a dedicated focus on launching economic reform initiatives aimed at achieving a balanced national economic structure. Emphasizing the long-term sustainability of economic and social well-being, the program prioritizes projects and financial policies geared towards boosting non-oil revenues within the general budget, reports Al-Qabas daily. Economic stakeholders have expressed optimism regarding forthcoming economic and financial reforms while stressing the urgency of expediting the implementation of diversification policies.
These measures are praised for their potential to strengthen Kuwait’s financial standing and enhance its international competitiveness, offering significant opportunities for private sector involvement, particularly in projects such as the development of the northern region as a hub for local and foreign investments. At the core of the program is the recognition that economic prosperity is crucial to addressing Kuwait’s challenges, with a particular emphasis on empowering the private sector and fostering competitiveness among small and medium enterprises.
By diversifying revenue sources and reducing reliance on oil revenues, the government aims to safeguard the state budget against volatile oil prices, ensuring sustained well-being over the medium to long term. Moreover, the program underscores the importance of enhancing the business environment through initiatives like the launch of a digital platform for company licensing and amendments to key laws governing public tenders and public-private partnerships. These measures are expected to bolster the private sector’s role in driving economic growth and creating employment opportunities for citizens. Saleh Al-Salami, Chairman of the Federation of Investment Companies, has voiced support for the program, emphasizing the private sector’s capacity to address Kuwait’s economic challenges if allowed to lead. He advocates for incentivizing the private sector, including tax exemptions similar to those enjoyed by foreign investors, to stimulate economic activity. Dr. Yacoub Ahmad Baqir, a Finance Professor at Kuwait University, underscores the urgency of economic reform, citing unsustainable reliance on oil revenues and the imperative of controlling public expenditures amid demographic challenges. He stresses the importance of involving the private sector in this endeavor to alleviate pressure on public finances and foster sustainable economic development.
Warning against the consequences of delay, the government emphasizes the escalating costs of inaction and the potential threat to Kuwait’s ability to meet its obligations. With a projected budget deficit over the next five years, prompt action is deemed essential to avert potentially dire outcomes and secure the nation’s economic future. Sources said that if the financial and economic conditions continue to deteriorate in this way, it is feared that dangerous results will be reached, not the least of which is:
■ Failing individuals, companies, banks and institutions.
■ Unemployment rates are dangerously high.
■ Collapse of social services. Deterioration of social security.
■ Significant inflation in the cost of living.
■ Government funding requirements are expected to double over the next ten years.
■ Financing the budget will require significantly higher oil prices, reaching more than $100 per barrel in 2033.
■ Kuwait’s economy will not develop into a knowledge-based economy that focuses on innovation and leading sectors, as Kuwait’s ranking in the Global Innovation Index will decline to less than 75 in 2033.
■ Kuwaitis will continue to contribute to the inflation of the size of the public sector instead of working in the private sector.
■ The population’s well-being and social welfare will deteriorate despite the increase in government spending, bringing Kuwait’s ranking in the prosperity index to more than 65 in 2033.
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