KUWAIT CITY, Nov 12: The construction sector in Kuwait has undergone significant financial shifts, with the first nine months of 2023 witnessing a 2.6 percent decline in pooled financing by local banks, amounting to 34.3 million dinars. This downturn, observed in the monthly statistics provided by the Central Bank of Kuwait for September, represents a reduction from 1.319 billion dinars in the corresponding period of 2022 to 1.285 billion dinars in 2023.

The decline in construction financing is further emphasized by a 4.5 percent monthly drop and a 5.7 percent annual decrease in September 2023. In tandem with this, the new credit facilities experienced a 2.45 percent decrease, declining from 17.474 billion dinars in the initial nine months of 2022 to 17 billion dinars in the same period of 2023. Particularly noteworthy is the substantial 32.5 percent decrease in personal monthly facilities provided by banks, totaling 1.3 billion dinars.

A closer examination of the trends in construction financing throughout 2022 reveals a remarkable 57.4 percent increase, reaching a total of 1.741 billion dinars. The construction sector displayed fluctuations in 2023, with a peak in March at 217.9 million dinars and a subsequent decline in April. The cumulative balance of construction financing provided by local banks exhibited an annual upswing of 16.3 percent, reaching its pinnacle at 2.527 billion dinars in September 2023, marking the highest level in two years.

Zooming out to encompass the broader financial landscape, the balance of total cash credit facilities provided by banks witnessed a modest 0.7 percent growth during the first nine months of 2023, reaching 52.828 billion dinars by the end of September. This balance experienced a monthly increase of 0.4 percent, reflecting approximately 218.5 million dinars, compared to 52.61 billion dinars at the close of August. On an annual basis, the balance increased by approximately 1.36 billion dinars from 52.1 billion dinars in September 2022. Amidst these financial dynamics, the construction sector in Kuwait grapples with several challenges.

Notably, there has been a decrease in the offering and awarding of projects, as well as delays in government payments to contractors over the past five years. Additionally, the sector faces the exacerbating dilemma of escalating construction costs due to labor shortages, leading to an unprecedented rise in wages. This, in turn, has adversely impacted the cost and progress of building residential plots, placing an increased financial burden on citizens, particularly given the significant surge in the prices of building materials.

By Ahmad Fathi
Al-Seyassah/Arab Times Staff