Kuwait Increases Investment Expenditure

The State is increasing financial allotments for investment spending with aim of hiking growth in non-oil sectors of the national economy, said the deputy premier and minister of finance.

Investment expenditure is forecast to reach 3.5 percent this year and four percent next year, said Anas Al-Saleh, the Deputy Prime Minister, in a statement at inaugural session of Kuwaiti Financial Forum

Estimated investment spending, including private expenditure in the State development scheme till 2020, has amounted to some KD 34 billion (approx. USD 111.2 billion), said the minister at the forum, patronized by His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah and organized by Kuwait Banks Union.

Minister Al-Saleh affirmed the State's keenness on supporting banking credit's growth, which grew 7.2 percent per year in September. The two-day forum coincides with major economic developments namely drop of oil prices, which have resulted in lower income for regional countries. Al-Saleh has opined that global markets have not totally recovered from the 2008 economic crisis, with continuing high rates of unemployment, high inflation, slow local production and prospected recurrence of recession.

This fragile global economic condition has negatively affected economies of the regional States namely banking institutions, amid mounting geopolitical jitters, in addition to other emerging issues that need to be tackled such as money-laundering and terrorism financing.

Aware of the sensitive circumstances, the Central Bank of Kuwait fully implemented Basel reforms' package between 2014 and 2015. On a wider scale, the State of Kuwait has adopted economic reforms' plans to remedy the financial sector, boost the private sector, diversify income, enhance oil proceeds, rationalize expenditure and improve government's performance, Minister Al-Saleh said.

Kuwait's "road map" also aims to tackle flaws in the economic structure, through diversification and increasing dependence on the private sector. As to the budget deficit, he has indicated that the State has withdrawn from the general reserves, borrowed from local and external banks.

Moreover, the CBK had issued bonds and sukuks worth KD 2.2 billion (some USD 7.3 billion) till end of the financial year (2016-2017). The issuance has risen the domestic debt to KD 3.8 billion (some USD 12.54 billion), accounting to 9.9 percent of the gross domestic product for 2017, estimated at KD 38.2 billion (approx. USD 125 billion), according to the International Monetary Fund.

Local banks have subscribed in the issued bonds, using financial surplus, minister Al-Saleh said, adding that the State has "made record success in marketing international bonds worth USD eight billion due to its credibility." Shedding further light on the State measures to maintain the economy well-being, the minister has indicated at the launch of the 2035 visionary strategy, in which the private sector plays a key role.

Diversifying the economic activities remains the key for sustainability, stabilizing the current account, the State budget and shoring up the labor market.

The government is determined to press ahead with full-scale economic and financial reforms regardless of status of the oil prices, the minister affirmed.

The forum tackles in particular regional States' options and plans to cope with decline of oil prices.

Bulk of the Gulf countries depend largely on oil to secure income however, Kuwait and the other states in the region have been encouraging economic diversification.