Kuwait moving on right path towards economy diversification: IMF
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.