GCC regional director at World Bank stresses need for reforms in Kuwait

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‘Great potential for Kuwait to transform into green economy’

KUWAIT CITY, March 12: The Regional Director of the Gulf Cooperation Council at the World Bank Issam Abu Suleiman says changing the social contract between the state and the citizens is not necessary to start economic reform, but rather it must be developed to be more beneficial to citizens, in conjunction with a comprehensive reform of the civil service system, reports Al-Anba daily. During a press conference held on Wednesday, he said the welfare state should be a sustainable state as well. Suleiman indicated that the current reforms are appropriate in the presence of large financial buffers, represented by the capabilities of the Kuwait Investment Authority and the reserves of the Central Bank. He highlighted that Kuwait is not financially weak and will not need to reduce the welfare of citizens in order to achieve reforms, but in the next few years the state may suddenly force it.

Rating
Suleiman explained that the downgrading of Kuwait’s credit rating gave an important indication to the state about the need to carry out reforms to achieve financial sustainability for the state and benefit from the state’s capabilities. Kuwait has great potential to attract foreign investment as it competes not only with the Gulf countries but the world as well. The rise of oil price is very good for the Kuwaiti economy and has a positive impact on the balance of payments and the financial situation, as the decline in prices in the last two years had a very negative impact on state revenues, which directly affected investments in the country. However, the reform agenda in the New Kuwait 2035 vision will move the economy, especially the development of the private sector. In the long run, Kuwait, like the rest of the Gulf countries, cannot rely on high oil prices, as it is in a continuous transformation. In order for Kuwait to be immune to oil price changes, economic diversification is an important tool, in addition to diversifying revenues and finding ways to spend those revenues effectively, as it was noticed that the salary section was higher than the state’s revenues.

Investment
Kuwait spends a large amount on the educational sector, but its outputs are not at the required level. The results of the tests are less than 400, while in other countries similar to it in terms of per capita income, it ranges between 500 and 570. Despite the large volume of investment in education, its outcomes are disproportionate to prepare young people for future jobs. Suleiman highlighted the importance of developing the quality of education and developing educational curricula in schools, as many countries have developed their curricula to suit current and future economic requirements. He stated that education in Kuwait and the Middle East cannot continue with the standards of 1960 and 1970, as the entire world is developing in a rapid manner that keeps pace with the skills required in the present and future.

Suleiman insisted that educational reform must be comprehensive, something that Kuwait needs urgently, and has great potential to achieve this. He indicated that Kuwait will face great difficulty in diversifying its economy and achieving the New Kuwait 2035 vision if it does not have the human capital to achieve this. Regarding recent reports that Kuwait is not fit to live climatically, Suleiman explained that Kuwait is a livable country, but there are great challenges related to climate changes in the Middle East region as a whole. If Kuwait is able to produce part of its electrical energy needs from renewable energy sources, it will reduce the cost for producing energy, and they will have surplus oil that they can export. In terms of financial and economic diversification, Suleiman said, “There is a great potential for Kuwait and the Gulf states to transform into a green economy. This does not need many reforms. We are talking about allowing the private sector and partnership projects between the two sectors to become part of the service providers in the country”. In addition, the Director of the World Bank office in Kuwait Ghassan Al- Khouja said the salary item announced in Kuwait’s budget for the 2021/2022 fiscal year was more than KD 12.6 billion. In 2005, it was about KD 1.8 billion, and in 2013 it was about KD 4.8 billion, which means it increased by 1,000 percent within 15 years. He revealed that the leadership positions occupied by Kuwaiti women in the public sector constitute 17 percent, which is a very low level, especially since the number of working women is greater than men.

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