Kuwait is a member of both the Organisation of the Petroleum Exporting Countries (OPEC) and the GCC. Additionally, the country is arguably the most politically dynamic in the Gulf, which has afforded it strong foundations to help tackle recent issues concerning parliamentary elections and accountability. By continuing with economic diversification efforts and reducing dependence on oil revenues, Kuwait is also adding momentum to several large infrastructure projects. The tabled projects are set to further integrate the country into the global economy.
“Our country is undergoing a transitional journey where reforms, both fiscal and economic, are indispensable for our prosperity. We are highly committed to achieving the goals set for the economy while ensuring the fair and gradual impact on citizens and nationals,” Prime Minister Sheikh Jaber Al Mubarak Al Hamad Al Sabah told the media. “In addition to all practical reforms, Kuwait requires a development of the cultural conduct of citizens and politicians where we all embrace change and commit to driving Kuwait to a more competitive, diverse and advanced nation.”
Kuwait’s economic strength is derived from its oil reserves, which amount to more than 101.5bn barrels, with the government setting a production target of 4m barrels per day (bpd) by 2020, up from the current level of 2.83m bpd (see Energy chapter). Oil has fuelled development in Kuwait since the Second World War, and production took on a central role in the economy after the industry was nationalized in 1975.
Accounting for more than 60% of GDP and 95% of exports, according to Kuwait’s Central Statistical Bureau, the country’s oil revenues have delivered strong public finances, consecutive annual budget surpluses and funded the development of a generous welfare system. Although the private sector has taken a limited role in the economy over the past four decades, Kuwait has produced globally successful firms, such as telecoms giant Zain and low-cost carrier Jazeera Airways. Kuwait has been pursuing a program of economic diversification that aims to jump-start the private sector via a boost in infrastructure projects.
Approved by Parliament in February 2015, the five-year, $155bn Kuwait Development Plan (KDP) is the current iteration of the government’s blueprint to enhance the country’s role as a banking, trade and services hub within the Gulf by 2020. With plans for upgraded infrastructure, expanded utilities, and housing investments, more than 500 projects have been nominated under the KDP as growth catalysts to restore the balance between Kuwait’s public and private sectors, and accommodate the demands of its growing population. Given the lower oil prices, the initiatives outlined by the KDP come at a critical time in terms of enhancing the state’s competitiveness as a destination for foreign direct investment.
Via: Oxford Business Group
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