Shrinking Economy In Kuwait, Public Finances In Deficit

Al-Shall's weekly report reveals that Kuwait witnessed 15 governments form between 2006 and the end of September 2020, averaging 350 days each in office. From December 2020 through December 20, 2023, when the government resigned, eight governments were formed, with an average lifespan of 105 days.

There has been a significant decrease in average government lifespan, which has decreased by approximately 70%. Highlighting Kuwait’s unique situation, where the public sector generates around 70% of the economy and employs about 84% of the national workforce, the report emphasizes the critical role of a stable and efficient government. An economy heavily dependent on oil requires a stable government with clear and definitive visions.

Kuwait's governance has been inefficient and unstable, affecting various performance indicators. The economy is shrinking, public finances are continuously in deficit, and populist decisions have led to labor imbalances. The business environment has become unattractive for both domestic and foreign direct investments. Citizens have not been satisfied with infrastructure projects despite their high costs. It indicates a broader problem when road repairs are not addressed, even for potholes on main streets.

The oil sector, on which Kuwait relies heavily, faces challenges, with the Oil Minister expressing concerns about flabbiness and potential production failures. With a new era beginning after the death of the Emir and the resignation of the government, Kuwait stands at a crossroads. The report underscores the need for a stable government formed based on efficiency criteria rather than genes and quotas. It emphasizes that Kuwait deserves a public administration adhering to the best standards, even if the initial path may be challenging due to the sabotage experienced over decades. Kuwait's GDP shrank by about -1.3% in the second quarter of 2023 compared to the same period in 2022, according to the report.

The decline in oil prices is cited as a major cause of the contraction. Despite efforts to diversify income sources, the contribution of sectors other than oil remains historically small. The report criticizes the Central Administration of Statistics for stopping the calculation and publication of GDP figures for about three years, citing the pandemic as the reason. This decision is deemed detrimental, as it hinders the measurement of economic performance and overlooks the importance of information flow and accuracy. In conclusion, the report stresses the importance of human commitment and excellence for progress. Kuwait is urged to respect work values and production in order to form a government based on efficiency and performance criteria.

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