Strategy needed to lessen impact of Kuwait’s public debt
KUWAIT: A clear strategy is needed to moderate Kuwait’s public debt and to lessen its impact on the country’s economy and finances, said a specialized economic study on Friday. The study, prepared by Development Study Center Kuwait (DSCK), said that Kuwait’s public debt reached KD 4.7 billion (USD 15 billion) in 2017, around 13 percent of the national budget.
The DSCK said that since 2013, public debt was on an upward trend, reaching around KD 1.5 billion (about USD 4.9 billion). “Creating an economic atmosphere for debt management connected with the state’s economy will set the suitable rates for the public debt”, a representative from the center said. He went on to say that creating a comprehensive tax system that is connected with economic activities and standards of living was the correct path to seek.
In regards to the current level of public debt, the DSCK affirmed that it was within international standards; however, “public debt is likely to increase due to the decrease in oil prices.” The center study said that any enormous increase in public debt will have “negative connotations” on the country, affirming that it was important to diversify the state’s earnings to include non-oil revenues, which in turn would decrease borrowing to cover the debt.
The DSCK suggested the formation of an efficient market for debt to decrease spending mid and long term debt management, leading to an increase in hedge funds and investment base. The center indicated that coordinating finance and monetary policies would achieve interest rates, stability and prevent pressure on the volume of liquidity. It called on the government to share regular statistics on public debt and interest rates in addition to other data to better manage public debt. The DSCK is a recently formed center aimed at encouraging economic, political, and social coordination amongst the government and private sectors and civil society organizations.