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Thursday , October 22 2020

Toward Kuwait’s Renaissance

Oussama Kanaan
Oussama Kanaan

Oussama Kanaan is the Director of the International Monetary Fund (IMF)’s Middle East Center for Economics and Finance (CEF) which is based in Kuwait. E-mail: okanaan@imf.org  website: www.cef.me

— Editor

By Oussama Kanaan

Why is this education and training Center located in Kuwait?” This is the question I am most frequently asked by new participants, lecturers and visitors to the International Monetary Fund-Middle East Center for Economics and Finance (CEF). And still, even today, approaching my second anniversary since joining the CEF, I find myself savoring my answer to the question, perhaps because I seize it as an opportunity to reminisce over the three school years I spent in Kuwait in the mid-1970s.

For it was in the 1970s that Kuwait became renowned as the main education and training ground for Arab scientists, artists and writers. It was also around that period that Kuwait established itself as the Arab world’s leading host for intellectual forums and open public discussions, which the country’s leaders drew upon to guide their own policies. Kuwait’s intellectual distinction and judicious use of its oil wealth made it the prime location for regional economic and financial centers such as the Arab Fund for Economic and Social Development (AFESD), and for prodigies and scholarly works that set new standards in the Arab world for analytical rigor and artistic creativity. And my answer seldom fails to recall Kuwait’s prominence on the world stage even in softer disciplines such as football, as well as in cinema, with the audacious production of the brilliant first Kuwaiti movie Bas Ya Bahar, which deftly reminded prosperous Arab Gulf societies of their economic hardship prior to the discovery of oil.

Viewed against the background of its remarkable cultural history, traditions, and achievements, it is not difficult to see why Kuwait stood out as the natural host for a center, in operation since 2011, that has a dual objective: To provide the Arab world’s public sector officials with first-class training in economics and finance, and at the same time provide a forum for discussion open to the wider public on pressing economic policy challenges.

One illustration of the CEF’s application of the two-pronged approach is its endeavor over the past two years to help policymakers tackle the economic consequences of the decline in the price of oil. The downturn in oil markets has not only adversely affected oil exporters  through a sharp drop in budgetary revenue, but it had wider spillovers for other Arab countries through lower investments, remittances, and aid from the Gulf region. The CEF’s work program is accordingly taking on board different strands of the economic issues involved. One set of courses aims at imparting policy-makers and practitioners with the knowledge and tools needed to address the shorter-run macroeconomic aspects of the challenge. For the GCC countries, a first-stage objective is to contain the deterioration in budget balances in a durable manner, including through an enhancement in the composition of expenditures toward growth-enhancing areas such as health, education, and efficient public investments, while targeting social transfers and subsidies toward those who need it. Other examples of near-term economic policies that have become of special interest to CEF participants are those needed to address emerging liquidity pressures in oil-exporting countries’ financial systems and the risk of a decline in the quality of banks’ assets.

Beyond the immediate pressures, the oil price decline has also brought to the fore the importance for GCC countries of longer-term strategies to steadily shift the source of revenue, employment and broader growth from the oil sector toward private sector activities. The design of such strategies often calls on expertise from other organizations to complement the IMF’s macroeconomic focus. The CEF has therefore intensified its joint work with its partners, notably the World Bank, OECD and WTO, to infuse the needed multi-disciplinary approach to such emerging issues. To illustrate, that approach has enabled the CEF to offer courses that cover complementary facets of the challenge of enhancing inclusive growth, private sector development, and reducing unemployment. In particular, training has been increasingly focused on helping officials design and implement policies conducive to sound public expenditure and tax policy (IMF), education and health sector reform and financing for Small- and Medium-Size Enterprises (World Bank), governance, business environment and competitiveness (OECD), and external trade expansion (WTO).

Aside from its role in education and training, the CEF has placed an especially high value on fostering open discussion among experts and the wider public to help in the formation of a vision for an economic transformation that reduces dependence on oil. Over the past year several symposiums have been led by the CEF, jointly with the AFESD, to discuss timely issues such as subsidy reform, tax policy and administration, and measures to diversify the economic base of Arab countries. The approach taken in the panel discussions has been to call on a diversity of views to be expressed by both panelists and the audience. Thus, for example, the audience at the diversification symposium had the opportunity to engage with panelists with a variety of perspectives, including IMF economists Reda Cherif and Fuad Hasanov, as well as Cambridge Professor Ha-Joon Chang whose work is often critical of IMF-supported policies. Similarly, Thomas Friedman’s participation sought to expand the debate on the impact of economic globalization by infusing an out-of-the box perspective that takes into account political economy and other factors that are sometimes overlooked in mainstream economic debates.

To my mind, Kuwait’s support for initiatives such as the CEF’s development is a small part of the country’s steady move in recent years toward a broader Renaissance. It is a reminder of the kind of investments that Kuwait’s leadership has favored by tradition, those undergirded by a long-standing vision to continually expand the country’s intellectual capacity, encourage the exchange of a broad spectrum of views on critical policy and strategic issues, and foster openness while serving the wider Arab community.

 

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