Kuwait mov­ing on right path to­wards econ­omy di­ver­si­fi­ca­tion: IMF

Kuwait Times - - LOCAL -

WASH­ING­TON:

Di­rec­tor of the Mid­dle East and Cen­tral Asia De­part­ment at the In­ter­na­tional Mon­e­tary Fund Ma­sood Ah­mad has lauded Kuwait’s fi­nan­cial re­form doc­u­ment to di­ver­sify na­tional econ­omy away from en­ergy sec­tor. The Kuwaiti govern­ment is mov­ing on the right path with its six-point fi­nan­cial re­form doc­u­ment, Ah­mad said on the side­lines of the joint an­nual World Bank and In­ter­na­tional Mon­e­tary Fund IMF meet­ing in Wash­ing­ton.

He, how­ever, em­pha­sized that Kuwait’s eco­nomic still suf­fers from low growth rates, de­cline in the pri­vate busi­nesses and non-oil projects com­pared with the pre­vi­ous year. Though the govern­ment has large buf­fers, it has to take nec­es­sary mea­sures to get out of such a dilemma, he said. He sug­gested a three-point plan to avoid more neg­a­tive im­pacts of the steep de­cline of oil prices on na­tional econ­omy.

The govern­ment has to grad­u­ally cut spend­ing to re­duce the bud­get deficit, ra­tio­nal­ize en­ergy con­sump­tion and di­ver­sify that na­tional econ­omy through en­cour­ag­ing the pri­vate sec­tor to be the en­gine of growth, Ah­mad added. The same ap­plies for other Gulf Co­op­er­a­tion Coun­cil states, he said, in­di­cat­ing that the GCC coun­tries need to ad­just spend­ing and try to in­crease non-oil in­come re­source. In this re­gard, he praised the Gulf states’ am­bi­tious plans to lower their re­liance on oil rev­enues. The Gulf state can also in­crease their non-oil rev­enues through the in­tro­duc­tion of dif­fer­ent kinds of taxes, par­tic­u­larly added value tax.

Also, Ex­ec­u­tive Di­rec­tor and Dean of the Board of Di­rec­tors of the World Bank Merza Hasan has urged Kuwait’s ex­ec­u­tive and leg­isla­tive pow­ers to co­op­er­ate to has­ten the ex­e­cu­tion of the state’s fi­nan­cial and eco­nomic re­form plans. “The state’s re­form plans should be ex­e­cuted now, oth­er­wise the na­tion will pay price later,” Hasan, a Kuwaiti na­tional, cau­tioned in state­ments. He em­pha­sized that all Gulf states are tak­ing the same steps but at quicker pace, leav­ing Kuwait lag­ging be­hind.

There is a huge pres­sure on the state bud­get due to the sharp drop in the prices of oil, the coun­try’s eco­nomic life­line, he clar­i­fied. Hasan com­mended the re­cent govern­ment’s de­ci­sion to cut fuel sub­sidy for lo­cal con­sumers. The fis­cal sav­ings of such a move could be used to up­grade in­fra­struc­ture and ed­u­ca­tional and health ser­vices, he viewed. He stated that the World Bank is con­tribut­ing to var­i­ous pro­grams to serve the Kuwaiti econ­omy.

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