By Dalia Badih
KUWAIT CITY, May 2: The American Business Council Kuwait-AmCham Kuwait, in collaboration with Citibank Kuwait, organized a virtual webinar titled:Kuwait COVID-19 Financial Response, on Thursday, April 23. the virtual webinar, which covered a variety of topics ranging from fiscal and Central Banks’ responses, Kuwait’s response to COVID-19 pandemic, its market since January 2020, and the impact on the banking sector.
Fatah Adour, CEO of Citibank Kuwait presented the webinar. In his opening remarks, Adour greeted all attendees and began his presentation with a snapshot of the global economic impact of COVID-19, highlighting how it has contributed to revised GDP growth figures in the U.S., United Kingdom, Japan, China and Europe.
He then proceeded to discuss how Central Banks have responded to the pandemic and fiscal policy. He commented: “Notably, the steps the Central Banks are taking nowadays are exceeding those from the financial crisis. For example, Central Banks have taken many programs from the financial crisis off the shelf, and are providing significant intervention to support liquidity and credit formation. Unlike the financial crisis of 2008, banks are now a central figure and key part of the solution as they remain central to the effective transmission of monetary and fiscal policy. In addition, fiscal response on both sides of the Atlantic has been massive - about 6-10+% of GDP - as we see increased targeted support for specific industries like airlines, credit support for businesses and SMEs, and workers protection such as improved unemployment support”.
Adour also discussed the economic stimulus packages in different countries across the GCC and globally. He highlighted how Kuwait’s stimulus package totaling $16.5 billion covers the three areas of: welfare and living costs, business support, and monetary policies. He then moved to the detailed steps Kuwait has taken since January in combating the COVID-19 pandemic examining different actions taken such as travel restrictions, health screening, quarantine measures, and allocation of funds and how they compare when graphed against the number of cases reported in the country.
Following that, Adour gave an overview of the foreshadowed economic impact of the pandemic when viewing data for 2019-2024. He explained the expected numbers for real GDP growth, consumer price inflation, government balance and current –account balance as a percentage of GDP and gave insight for each year.
“The US-KWD exchange rate has been slowly depreciating. We can see that the Year-to-Date (YTD) depreciation is close to 2%, and the Kuwaiti dinar as an undisclosed basket of currency is estimated to reflect Kuwait’s commercial flows as well as investment flows”, commented Adour. “So a depreciating KWD will support the local budget in the sense that when Kuwait will sell oil, the KWD depreciation means the dollar appreciation, which will result in that the equivalent of the dollar sales in local currency will be higher. This will in turn support the state budget” he added.
Adour ended his presentation with an expected overall stable outlook and reasons for this expectation, which are based on an overview of the different key drivers such as asset risk, capital, profitability, funding and liquidity and how each will fare in face of coronavirus disruption and oil price drop according to Moody’s Investors Service.
Adour then concluded the session by opening up the floor to Q&A again, in which he clarified any lingering concerns or new questions from the attendees.