Kuwait Should Speed Up Its Economic Reforms

IMF Director for the Middle East and Central Asia Department Jihad Azour emphasized Kuwait's urgency in expediting its economic reforms and diversifying income sources by expanding various economic sectors. At a recent conference at the International Monetary Fund's Center for Economics and Finance in Kuwait, he stated that this move would not only improve Kuwait's business environment but also make it more attractive to foreign investment. To achieve economic success, Azour emphasized the need to open new horizons and develop sectors related to renewable energy, the environment, and other avenues.

He also stressed the need to enhance Kuwait's social system in order to address crucial challenges in education, health, and housing. Kuwait's advanced economic status and efficiency make strengthening its regional role essential, leveraging ongoing transformations. As OPEC+ and higher oil prices in 2023 have had a positive impact on Kuwait's economy, Azour highlighted the government's efforts to bolster financial reserves and improve the public finances. Kuwait must, however, accelerate its reform pace, sustain growth, create new jobs, and increase non-oil sector income while reducing oil sector dependence. According to Azour, Kuwait's economy, both oil and non-oil, is expected to improve in 2024 because it has been able to increase its financial reserves by supporting the stability of oil prices after three years of decline.

According to Reserves Azour, Kuwaiti investors are among the best in the region and the world. In order to increase Kuwait’s role as a regional center for finance and business, they must also be utilized. By enhancing small, medium, and emerging companies' ability to obtain financing and by encouraging young entrepreneurs to work in the private sector, they can lead the transformation process and enhance their ability to obtain financing. In addition to confirming that Kuwait has high levels of cash reserves, he stressed the importance of putting in place a comprehensive management of assets and debts, which allows for a balance between financial capabilities and borrowing potential, especially since Kuwait has both solvency and financial strength, which makes it possible to work on both axes simultaneously.

According to him, tax reform is essential for diversifying sources of income and ensuring the sustainability of public finances is one element of economic stability. Despite its high level of solvency, liquidity, and its ability to stabilize in the face of global fluctuations and shocks, the Kuwaiti banking sector is "developed and ancient," according to Azour. In 2023, the rise in interest rates and the turmoil experienced by some American banks clearly demonstrated this.

Furthermore, Azour noted that prudent crisis management and preventive policies will be essential in the near term where the economic impact of a conflict is acute or risks are high. It is essential that MENA countries do not overlook the importance of reform and resilience, particularly those that are already facing significant structural challenges. There are global headwinds, domestic challenges, and geopolitical risks weighing down MENA economies.

The crisis will undoubtedly reshape the future of the region. "This crisis could usher in an era of high uncertainty for so many countries if not handled properly and without a lasting ceasefire, even if the conflict remains contained," Azour said. He emphasized the strong partnership between the IMF and Arab countries, highlighting the IMF's continued efforts to help countries mitigate the impact of adverse shocks and spillovers. He stressed that the IMF stands ready to assist countries in the region with policy advice, technical assistance, and financing.

By Ahmad Fathi

Al-Seyassah/Arab Times Staff and Agencies

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