We failed in phase 1 of reopening; can we revive economy in stage 2?

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The first stage of the five-stage reopening scheme, which started on March 12, has resulted in failure, as the number of coronavirus cases has been increasing with the number of infected Kuwaitis exceeding 50 percent of the total daily cases over the last few weeks.

This makes it hard to predict the outcome. We think the government will give up and let life go on, despite its great effort.

However, we people failed to meet its simple demands and chose to ignore them. The second stage of the plan for returning to normal life is related to reviving our economy and facing the challenges that almost every country in the world is dealing with, as well as figuring out how to stimulate economic demand, and manage our biggest challenge of population restructuring by reducing over 70 percent of the non- Kuwaiti population.

Meanwhile, we must also deal with the ongoing financial deficit of more than KD 7 billion or 77 percent of the total budget of KD 20 billion. The oil price is unlikely to reach any level above $50 per barrel in the coming months. We need an oil price of $80 per barrel to balance our current budget. Such a level is farfetched and should not be expected in the coming five to six years.

Therefore , the first headache for our government is to figure out how to balance the budget and by what means. Population restructuring is the main challenge. It can reduce about one million lowpaid marginal workers in the country; however, the labor market will suffer a severe shortage and this could push the wages up.

This will in turn create another black market and perhaps lead to repetition of the “Bangladeshi” episode involving top high officials who will issue or allow the issuance of work permits at the expense of poor needy workers coming to Kuwait to earn some money and send to their families.

Our government now must take the hardest decision of relying more on the private sector to push the economy forward. It just cannot create and make room for employing Kuwaitis.

Time has come to see our performance in the private sector, and the challenges everyone must face working hard and earning their salaries and bonuses. In private businesses, individuals can find themselves and excel.

Of course, it is not easy money, but it encourages creativity and productivity. There are many ways to discuss with the private sector its needs and wants; the same applies to the government, but it must be prepared to download or let go of some of its departments.

Some of its activities must be privatized, starting with small departments like postal service, the services of the Ministry of Information, and many others that could be initiated by both parties.

The government should also be prepared to get rid of many oil sector activities and oil companies, provided it has the will to do so and confront the Parliament.

We need to take many steps but I hope they do not end up like the first step of the plan for reopening the economy, which was a failure. Have we learned our lesson now? Or do we need to go further? Or when?

By Kamel Al-Harami Independent Oil Analyst

email: [email protected]

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