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Kuwait’s Government Backs off from Reform Plans after Parliament Pressure | ASHARQ AL-AWSAT English Archive 2005 -2017
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Kuwait Deputy Prime Minister and Finance Minister Anas Al- Saleh. KUNA

Kuwait – Kuwait is increasing financial allotments for investment spending with aim of hiking growth in non-oil sectors of the national economy, said the Deputy Premier and Minister of Finance Anas Al-Saleh.

Investment expenditure is forecast to reach 3.5 percent this year and four percent next year, said Saleh, in a statement at inaugural session of Kuwaiti Financial Forum on Tuesday.

Estimated investment spending, including private expenditure in the State development scheme till 2020, has amounted to some KD 34 billion (USD 111.2 billion), said the minister at the forum, patronized by Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah and organized by Kuwait Banks Union.

Saleh affirmed Kuwait’s keenness on supporting banking credit’s growth, which grew 7.2 percent per year in September.

Aware of the sensitive circumstances, the Central Bank of Kuwait (CBK) fully implemented Basel reforms package between 2014 and 2015.

On a wider scale, Kuwait has adopted economic reforms plans to remedy the financial sector, boost the private sector, diversify income, enhance oil proceeds, rationalize expenditure and improve government’s performance, Saleh said.

Kuwait’s “road map” also aims to tackle flaws in the economic structure through diversification and increasing dependence on the private sector. Regarding the budget deficit, he indicated that the country has withdrawn from the general reserves and borrowed from local and external banks.

The CBK had issued bonds and sukuks worth KD 2.2 billion (some USD 7.3 billion) till end of the financial year (2016-2017). The government also withdrew unspecified amounts from its reserves, estimated at $600 billion, to meet the budget deficit.

Saleh said the government put forward a bill allowing the state to borrow up to 20 billion dinars ($65.5 billion) over the next five years.

The issuance has raised the domestic debt to KD 3.8 billion (some USD 12.54 billion), accounting to 9.9 percent of the gross domestic product for 2017, estimated at KD 38.2 billion (approx. USD 125 billion), according to the International Monetary Fund.

Local banks have subscribed in the issued bonds, using financial surplus, Saleh said, adding that the State has “made record success in marketing international bonds worth USD eight billion due to its credibility.”

Diversifying the economic activities remains the key for sustainability, stabilizing the current account, the state budget and shoring up the labor market.

The government is determined to press ahead with full-scale economic and financial reforms regardless of status of the oil prices, the minister affirmed.