Mubasher: While Kuwait is an extremely wealthy and oil-rich state with huge investment demands, the Kuwaiti market failed to invest in infrastructure or strategic projects over the past few years, GlobalData recently reported citing its editorial director, Richard Thompson.
Unfortunately, there is no reason to be optimistic about regarding the 2020/2021 budget when it comes to an increase in investment spending by the government in the coming period, Thompson added, according to a recent press release.
He further noted that salaries and subsidies represent 71% of this budget while capital expenses account for 13% of planned expenditure.
“The news that Kuwait is not only running a budget deficit but that the deficit is increasing will come as a surprise to many companies in the country who are struggling to find new business opportunities. Where they are winning work, they are often not being paid. They will be asking how Kuwait can be overspending when they are seeing no spending happening,” Thompson explained.
He added, while about 10% of Kuwait’s budget is allocated to Kuwait Investment Authority’s Future Generations Fund (FGF), the International Monetary Fund (IMF) considers this moving money internally and not expenditure, as Kuwait is reporting. Furthermore, the new budget significantly shows the Kuwaiti government’s complete reliance on oil exports, which account for 87% approximately of the country’s income. This highlights the dire need to diversify Kuwait's local economy in order to bring new revenue streams.
Thompson also sees that it is crucial to use private sector partnerships (PPPs) to deliver investment projects in line with the New Kuwait 2035 strategy.