Kuwait has suffered in the wake of falling oil prices, but is capable of recovering from a period of slow growth, the executive board of the International Monetary Fund (IMF) said Wednesday.
The executive board said a Nov. 25 Article IV discussion with Kuwait and IMF staff showed that recovery is possible with significant financial buffers as well as a good amount of open borrowing power.
This can be achieved through investment spending, IMF officials said. Kuwait’s gross domestic product numbers are not expected to rise quickly in the coming year, so investment in the nation’s infrastructure will be critical.
Inflation is expected to jump to 3.4 percent, although forecasters think Kuwait’s overall financial picture will improve as oil and gas prices pick back up. It is predicted this upswing will also create jobs. Officials urged members of the private sector to do their part in helping the economy recover my investing wherever possible.
Kuwaiti officials plan to launch value-added and business profits taxes in the coming year, which analysts feel will also help with fiscal recovery. The analysts also suggested combining domestic and external sources of funding so capital spending will remain stable.
The consultation found Kuwait’s banking system to be stable and suggested continued developed of its framework. They also urged the promotion of private employment for the nation’s citizens as well as reforms in the labor market and strong efforts to improve the country’s education system and business sector.
