Kuwait government launches series of financial and economic reforms

Kuwait's budget deficit to be doubled due to drop in oil revenues by 50%

  
An aerial view shows very little traffic on the roads of Kuwait City after the country entered virtual lockdown, following the outbreak of coronavirus, in Kuwait City, Kuwait March 16, 2020. Image used for illustrative purpose.

An aerial view shows very little traffic on the roads of Kuwait City after the country entered virtual lockdown, following the outbreak of coronavirus, in Kuwait City, Kuwait March 16, 2020. Image used for illustrative purpose.

REUTERS/Stephanie McGehee

KUWAIT CITY - The government is launching a series of financial and economic reforms, following the drop in oil prices to about $30 per barrel, reports Al-Qabas daily.

According to informed official sources, reform is no longer a choice, but rather a necessity and even more.

Therefore, there is a need to activate economic reform measures, which were previously approved and many basic articles of which remained ink on paper.

The required reform will be accompanied by incentive measures for economic activities that are strongly affected in the public and private sectors from the repercussions of the coronavirus crisis. Add to this is the decline of oil prices at different levels.

The budget deficit will be doubled due to the decrease in oil revenues by 50 percent. The decline of non-oil revenues is almost at the same level due to the economic downturn, which seems frightening if the two crises are prolonged – collapse in oil prices and coronavirus rampancy.

Privatization
Among the proposed procedures, privatization has been presented as an option that is also required. Recently, the Central Bank of Kuwait reduced the discount rate by one percent (from 2.5 percent to 1.5 percent) to the lowest historical level.

In this regard, financial and economic sources stressed that the Central Bank of Kuwait is playing its role to the fullest and is very advanced in its attempts to make the economy stand up to the successive crises.
Reducing interest would provide the economic sectors with a dose of oxygen that would ease the burden of financing to levels never seen before in Kuwait.

Commercial, industrial, real estate and stock sectors welcomed the decision of the Central Bank, describing it as “historic and responsible.” Other stakeholders have called for its example to save the national economy from this very diffi- cult circumstance.

A government official source declared, “The hour of truth has come … so would we dare propose effective solutions, and perhaps also painful ones?!”

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