Kuwait in need of economic miracle
IT is time to think outside the box of oil. If Kuwait needs to move forward, the needed economic reforms should be implemented soon.
Kuwait’s financial rating has been downgraded regularly since last year and another downgrade is expected shortly. Internally, the government is almost paralyzed to do anything and does not have the stamina to deal with our economic mess. Perhaps our government still thinks that the oil prices will recover sometime soon and hit $100 per barrel in the coming years, and that everything will be normal. It does not know that such a price level has gone with the wind and there is no way we can see any level beyond $ 60 per barrel.
Of course, there are some hard challenges that we have to face soon. We have to accept that “our pockets” will be touched, but certainly not our suffering. Kuwait has to reduce its subsidies for electricity, water and fuel for the local market, as they take up 15 percent of our annual budget, as well as the 75 percent of our budget for paying our monthly salaries. The balance is left for the governmental expenditures for infrastructure and maintenance, with nothing much left for local investments.
There is no question that the current government is facing a tough Parliament which is strongly demanding the government to resign, but the same process will happen again if there are no frank and open discussions to compromise their priorities, which again are highly different.
While the government can start by reducing the huge number of institutions and departments, and work on better utilization of various departments, it needs efficient and effective managers and department heads.
The government must show its willingness to move forward by deeds and not by words. It must be clear and open in talking to the people about the severity of our economic crises.
I must state we simply cannot rely on our sovereign wealth funds, which today is valued within the range of $650 billion, to borrow or take away, as our annual deficit is about KD 10 billion or $ 30 billion annually. This will last for another 20 years, assuming a fixed annual budget of KD 20 billion. It is also impossible to ignore the fact that 20,000-25,000 new graduates are recruited every year.
Come next year, it is certain that we will be saying the same thing, in the absence of a clear vision or determination on how to move forward, while our neighboring countries have been overtaking us in every field. The problem is that we simply lack the vision to move forward.
Economic solutions are at hand for years, but who will be the hero to lead and implement them?