Kuwait pursues new plan to offset oil prices decline – ‘GCC needs to readjust economies’

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KUWAIT CITY, Dec 18: The State of Kuwait managed to gain a prominent status at the Arab and international levels, as well as achieve its goals, due to its oil revenues, reports Al-Jarida daily quoting former Minister of Foreign Affairs Sheikh Dr Mohammad Al-Sabah. Speaking recently in a lecture as part of a workshop for researchers with doctoral degrees entitled, ‘Curse of Oil Resources’; the former minister pointed out the financial support that Kuwait granted to brotherly and friendly countries in the 1970s was equal to its local output. On the other hand, the financial support provided by industrial countries to developing countries was estimated at 0.003 percent of their gross local output.

He said the State of Kuwait made an important and big change in the mechanism of distributing its fortune, as it has enacted a legislation which necessitates depositing 10 percent of the annual oil income into the Future Generations Fund.

He added some OPEC member-countries have the highest level of income for individuals, yet they share with other developing countries many instances of economic backwardness like the lack of flexibility in the economic structure and absence of an integrated labor market. He expects the GCC countries to keep on making adjustments in their economies in view of the expected reduction of oil revenues and slow economic growth in the coming year.

He explained the rate of success in adapting to such circumstances depends on the stability of the international oil market and the political positions in the region. He went on to say there are indicators that GCC countries are exerting serious efforts to overcome such challenges and to take the necessary precautionary procedures to improve their positions.

He stressed the oil sector is considered the main source of foreign currencies and revenues for OPEC member countries, adding the governmental expenditure on the individual in Kuwait increased from KD506 in fiscal 1969/1970 to KD1,800 in financial year 1979/1980. He asserted the oil shock, which started in the beginning of 1983 when oil prices and level of production declined, unveiled the structural faults and weak position of the oil exporting countries’ economies amid the economic fluctuations.

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