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Wednesday , December 11 2019

Major rise in assets of KIA; government expenditure cut – Kuwait adjusts to new realities

Kuwaiti Finance Minister Anas Al- Saleh speaks during the Euromoney conference held in the capital Kuwait City on Sept 26. (AFP)

KUWAIT CITY, Sept 26, (Agencies): Assets managed by Kuwait Investment Authority (KIA), one of the world’s biggest sovereign wealth funds, have grown more than 34 percent over the past five years, Finance Minister Anas Al- Saleh said. Speaking at a Euromoney conference, Saleh described the state’s reserves and assets, managed by the KIA, as representing a “safety valve” for the economy during times of crisis as well as a nest egg that would provide for future generations.

“The growth in assets achieved by the (Kuwait Investment) Authority over the past five years is more than 34 percent,” he said. He did not disclose the size of the assets. The Sovereign Wealth Fund Institute ranks KIA as the world’s fourth-biggest sovereign fund, managing $524 billion.

A KIA statement carried out by the country’s state news agency earlier this year implied the fund had assets of about $515 billion as of March 2016. Among KIA’s high-profile investments, it owns 6.8 percent of German automaker Daimler AG and stakes in major Kuwait-based firms such as 18.4 percent of Kuwait Finance House, according to Thomson Reuters data.

Despite challenges facing the Kuwaiti economy, over one billion dinars (around $3.27 billion) was saved in government expenditure between 2016 and 2017, Al-Saleh said. Al-Saleh noted that the government began its “New Kuwait” economic and financial reform to diversify the country’s non-oil revenues to help support Kuwait’s vision 2035. He indicated that since the sharp decline in oil prices, various government bodies began to implement measures to ease the effects of the decrease. So far, the plans seem to be going on course, said the minister.

The stability of the local currency market is not adequate nor is it a replacement for much needed structural and economic reforms, the governor of the Central Bank of Kuwait (CBK) said on Tuesday. In a speech to open the ninth session of the “Euromoney Kuwait Conference 2017”, Dr Mohammad Al-Hashel underlined “CBK’s core mandate as a monetary and regulatory authority and its contributions to productive investments.”

In times of turmoil, Al-Hashel said, CBK has spared no effort to ensure financial stability and a robust currency market, which he described as among the pillars of the national economy. He added that preserving monetary stability “is not the final objective but a means towards an end, where the financial sector plays its due role.”

The Kuwaiti official’s remarks come against the backdrop of the 10th anniversary of the global financial crisis, which had ripple effects across the global financial system. Al-Hashel pointed out that the subsequent financial meltdown had serious economic consequences, where “global output sharply declined, growth significantly slowed down and unemployment soared across the world.” He revealed that by some estimates, “cumulative output loss since the crisis has been a hefty 25 percent of the world’s Gross Domestic Product (GDP). Meanwhile, on how to avert similar future crises, Al-Hashel quoted a Danish philosopher named Soren Kierkegaard, saying that “life must be understood backwards, but it must be lived forward.” He also cited several concrete steps CBK has taken to ensure a developed regulatory regime and a stable financial market.

 

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