KUWAIT CITY, Jan 11: Jihad Azour, the Director of the Middle East and Central Asia Department at the International Monetary Fund’s Center, emphasized the urgency for Kuwait to expedite its economic reforms and diversify sources of income by expanding various economic sectors. This strategic move, he said during a recent conference at the International Monetary Fund’s Center for Economics and Finance in Kuwait, would not only enhance the business environment but also increase Kuwait’s attractiveness to foreign investments. Azour stressed the importance of opening new horizons and developing sectors related to renewable energy, the environment, and other avenues to achieve economic success.

Furthermore, he underscored the need for Kuwait to enhance its social system, aligning it with crucial challenges in education, health, and housing. Given Kuwait’s advanced economic status and efficiency, strengthening its regional role becomes imperative, leveraging ongoing transformations. Acknowledging the positive impact of the OPEC+ agreement and rising oil prices in 2023 on Kuwait’s economy, Azour highlighted the government’s efforts to bolster financial reserves and improve the public financial situation. However, he emphasized Kuwait's need to quicken its reform pace, sustain growth, create new jobs, and increase non-oil sector income while reducing reliance on the oil sector. Azour, expects the performance of the Kuwaiti economy, both oil and non-oil, to improve in 2024, stressing that the country was able during the past year to raise the level of its financial reserves by supporting the stability of oil prices, after three years of decline.

Reserves Azour said the Kuwaiti investors are among the best in the region and the world. They must be utilized to enhance Kuwait’s role as a regional center for finance and business, calling at the same time for granting small, medium, and emerging companies a greater role in the economy by enhancing their ability to obtain financing and allowing young entrepreneurs to lead the transformation process by encouraging them to engage in work in the private sector. He confirmed that the high levels of cash reserves provide Kuwait with a high degree of financial stability, he pointed out the importance of working on a comprehensive management of assets and debts that allows for reconciliation between financial capabilities and the possibility of borrowing, especially since the solvency and financial strength of the State of Kuwait allows work on both axes together.

He stated that carrying out tax reform is required within the strategy of diversifying sources of income and ensuring the sustainability of public finances is one of the elements of economic stability. Azour described the Kuwaiti banking sector as “developed and ancient,” as it enjoys a high level of solvency, liquidity, and the ability to stabilize in the face of global fluctuations and shocks, and this is what appeared to be the case clearly in 2023 with the rise in interest rates and the turmoil witnessed by some American banks.

Azour also highlighted that where the economic impact of the conflict is acute or risks are elevated, prudent crisis management and preventive policies will be critical in the near term. He stressed that MENA countries, especially those with already diminishing policy space and significant structural challenges, should not lose sight of the important reform and resilience agenda, adding that across the MENA region, the combined effects of global headwinds, domestic challenges, and geopolitical risks are weighing on economic momentum.

“Undoubtedly, the crisis will reshape the region’s future. This crisis could inaugurate an era of high uncertainty for so many countries if not properly addressed and absent a lasting ceasefire, even if the conflict remains contained,” Azour said. He underlined the strong partnership between the IMF and Arab countries, highlighting the IMF’s continued efforts to help countries mitigate the impact of adverse shocks and spillovers, stressing that the IMF stands ready to step up needed support through policy advice, technical assistance, and financing to countries in the region.

By Ahmad Fathi
Al-Seyassah/Arab Times Staff and Agencies