Kuwait economy shrinking, public finances in continuous deficit

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KUWAIT CITY, Jan 2: Al-Shall’s weekly report reveals that between 2006 and the end of September 2020, Kuwait witnessed the formation of 15 governments, averaging approximately 350 days in office each, reports Al-Qabas daily. However, from December 2020 to December 20, 2023, when the government resigned, there were 8 governments formed, with an average lifespan of about 105 days.

This reflects a significant decrease, with the average lifespan of a government reduced by about 70%. Highlighting Kuwait’s unique situation, where the public sector generates around 70% of the economy and employs about 84% of the national workforce, the report emphasizes the critical role of a stable and efficient government. With the economy heavily dependent on oil, a stable government with clear and definitive visions is deemed essential.

The lack of stability and inefficiency in Kuwait’s governance has had adverse effects on various performance indicators. The economy is shrinking, public finances are continuously in deficit, and populist decisions have led to labor imbalances. The business environment has become unattractive for both domestic and foreign direct investments. Infrastructure projects, despite their high cost, have not met citizens’ needs. The inability to address road repairs, even for potholes on main streets, indicates a broader issue.

The oil sector, on which Kuwait heavily relies, faces challenges, with the Oil Minister expressing concerns about the sector’s flabbiness and potential failure to meet production targets. With a new era beginning after the death of the Emir and the resignation of the government, Kuwait stands at a crossroads. The report underscores the need for a stable government formed based on efficiency criteria rather than genes and quotas. It emphasizes that Kuwait deserves a public administration adhering to the best standards, even if the initial path may be challenging due to the sabotage experienced over decades. Examining Kuwait’s GDP figures, the report notes a contraction of about -1.3% in the second quarter of 2023 compared to the same period in 2022.

The decline in oil prices is cited as a major reason for the contraction. Despite efforts to diversify income sources, the contribution of sectors other than oil remains historically small. The report criticizes the Central Administration of Statistics for stopping the calculation and publication of GDP figures for about three years, citing the pandemic as the reason. This decision is deemed detrimental, as it hinders the measurement of economic performance and overlooks the importance of information flow and accuracy. In conclusion, the report stresses the importance of human commitment and excellence for progress. It calls for a government formed based on efficiency and performance criteria, urging Kuwait to respect work values and production for meaningful reform.

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