KUWAIT CITY, April 18: The Central Bank of Kuwait (CBK) announced the conclusion of the mission of experts from the International Monetary Fund (IMF), which carried out their work online from April 4-8 within the framework of the preliminary periodic consultations for the year 2021 in accordance with Article Four of the agreement on establishing the fund. The Central Bank issued a press statement in which it revealed that it coordinated with the IMF and the concerned local authorities in making the necessary arrangements; such as collecting data and scheduling meetings with senior officials in governmental and non-governmental agencies to discuss the economic conditions, financial policy, monetary policy, and strength of the banking and financial sector.
The IMF experts praised the efforts of CBK in strengthening the banking and financial sector. Governor of the Central Bank Dr Muhammad Al-Hashel disclosed the IMF experts commended CBK for its continuous monitoring of credit risks, as well as fortifying the regulatory and supervisory frameworks aimed at ensuring financial stability. The IMF experts pointed out that even if the Kuwaiti banking sector experienced shocks in 2020, it remains resilient and enjoys a good level of capitalization and liquidity; thanks to the prudent supervisory role of CBK.
The CBK governor revealed the IMF experts highlighted the nature of the structural challenges the Kuwaiti economy is facing and ways to address them, while noting the Kuwaiti authorities ’rapid and decisive action to address the health and economic impacts of the coronavirus pandemic despite the grave challenges posed by the pandemic. Like other Gulf Cooperation Council (GCC) countries, Kuwait suffered from the repercussions of the pandemic; in addition to the oil price decline and reduction of oil production under the OPEC Plus Agreement which imposed heavy burdens on economic activity and financial balances in 2020. Commenting on the economic performance in 2020, the IMF experts said the Gross Domestic Product (GDP) of Kuwait shrank by about eight percent (six percent for non-oil sectors) last year; while the overall budget balance decreased remarkably compared to the previous year.
The IMF experts expect gradual recovery in 2021 considering the revival of domestic and external demands as vaccination operations continue. Nevertheless, they pointed out that a great deal of uncertainty surrounds such expectations for various reasons; including the continuation of the pandemic, and global and local measures to curb the spread of the virus. In conclusion, the IMF experts emphasized the importance of continuing to prioritize the fight against corona and mitigate its effects, especially on the most vulnerable groups, until the recovery is stabilized on a steady path; followed by the need to control public finances and implement strong structural reforms to maintain fiscal buffers and enhance economic growth.