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Saturday , September 21 2019

Oil must stay below $50 per barrel

Low oil prices key to economic reforms

Kamel Al-Harami Independent Oil Analyst

Keeping the oil prices below $50 per barrel is the only hope for ensuring any serious economic reforms in Kuwait, especially with the ongoing budget deficits.

This should force us to take serious actions in stopping the wastage of money on salaries without any production or productivity. A low oil price is the only remedy for oil producing countries to take harsh economic reforms.

This should be coupled with continuous reminders that oil is not the solution, and finding new alternatives is the only weapon. This should be driven by a serious and strong government that can carry out economic reforms all the way with tangible work, without any favors, and ensuring equal opportunity to all.

We in Kuwait are the last to take any measured economic reforms yet in order to correct and upgrade ourselves within a short time, even though many opportunities exist, and despite all the financial economic studies undertaken by various international organizations, governments and private bodies.

The improvement in oil prices to the level of $60 per barrel does not seem to affect the government despite the shortage, as it can always use its financial deposits to balance its books for some time.

However, it will hurt us more if the oil prices remain weak and within the $50 level. Another factor that our Kuwait government can’t do with its economic program is that it has to compromise and get the Parliament approval, under the usual political compromises, which at the end results in nothing.

This is why weak oil prices can work for us in taking active serious actions, especially with the lack of full parliamentary support and new job opportunities for the coming 20,000 new job seekers. Almost 50 percent of our government employees or 193,000 out of a total of 390,000 employees are nonproductive with no active work or production. Some of them do not even have any office space.

This kind of practice should stop, but again interferences of the members of our Parliament just make the government’s task near impossible. Economic reforms are needed now more than ever. We need help that should come from outside, as oil prices are bound to be low for years to come. We in Kuwait have greater chances and opportunities without the need to depend on oil and with our low population and standard education. Such a day will hopefully come soon.

By Kamel Al-Harami Independent Oil Analyst

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