Large financial assets, low debt and a sound banking sector underpin the resilience of Kuwait’s economy, however, the country must implement a new set of measures, including a value added tax, to offset the risks of lower oil prices and uncertain output, the International Monetary Fund said
Supported by government spending, employment and credit growth, Kuwait’s non-oil gross domestic product could expand by 3 per cent this year and accelerate to 3.5 per cent over the medium term, the Washington-based lender said in a statement on Monday after concluding its Article IV consultations with Kuwait.
A rise in consumer spending, on the back of credit growth in Kuwait, has also underpinned the country’s non-oil economic growth, it noted.
With oil exports broadly flat and imports rising, the current account surplus of Kuwait would dissipate over the medium term, according to the IMF. It expects inflation in the country to increase to 1.8 per cent this year from 1.1 per cent in 2019, as house rents begin to recover.
The banking system in the country remains sound and the system-wide capital adequacy ratio climbed to 17.6 per cent as of September 2019 – well above the required regulatory ratio – with banks in the country flushed with short-term liquidity.
Kuwait’s equity markets also outperformed the country’s Gulf peers in 2019, partly benefiting from portfolio inflows after inclusion of Kuwaiti equities in the FTSE Russel and MSCI emerging markets indexes. MSCI Kuwait surged 29 per cent last year, compared to a 15 per cent rise in MSCI GCC and MSCI Emerging Markets indexes. Market capitalisation of Borsa Kuwait, the oldest bourse in the region, also climbed to an all-time high of $35 billion (Dh128.5bn) in December 2019, the IMF noted.
Assets of the Kuwait Investment Authority, the country’s sovereign wealth fund, surpassed 410 per cent of the country’s GDP by the end of 2019. Its Future Generations Fund also continued to receive mandatory contributions from the government, as it generated strong returns on its assets, which bodes well for the economy, according to the IMF mission’s estimates.
Kuwait, like its GCC peers, has embarked on fiscal and structural reforms of its economy including improvements in its business climate, a reduction of the government’s role in the economy, deepening capital markets, and prioritising development of small and medium-sized enterprises. The aim is to boost private sector growth, however, the fiscal adjustment needed is “proving difficult” due to the public’s opposition to reducing the public wage bill, subsidies and introducing new taxes, the IMF said.
Introduction of a 5 per cent VAT would “broaden the tax base, yield stable revenue, help upgrade tax administration capacity and contribute to a deeper understanding of the input-output structure of the economy”, the IMF said. “This would also bring Kuwait in line with Bahrain, Saudi Arabia and the UAE, which have recently implemented the tax as part of the GCC-wide agreement.”
Delays in fiscal reforms, the IMF said, would amplify the country’s fiscal financing needs, while slow progress on the economy’s structural reforms could dampen growth.
Weaker-than-expected global growth could drive oil prices lower and a sustained drop in crude prices would generate “unfavourable macro-financial dynamics, with weakening fiscal and current account balances and widening financing needs”, the IMF added.
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Super Bowl LIII schedule
What Super Bowl LIII
Who is playing New England Patriots v Los Angeles Rams
Where Mercedes-Benz Stadium in Atlanta, United States
When Sunday (start time is 3.30am on Monday UAE time)
Stage result
1. Pascal Ackermann (GER) Bora-Hansgrohe, in 3:29.09
2. Caleb Ewan (AUS) Lotto-Soudal
3. Rudy Barbier (FRA) Israel Start-Up Nation
4. Dylan Groenewegen (NED) Jumbo-Visma
5. Luka Mezgec (SLO) Mitchelton-Scott
6. Alberto Dainese (ITA) Sunweb
7. Jakub Mareczko (ITA) CCC
8. Max Walscheid (GER) NTT
9. José Rojas (ESP) Movistar
10. Andrea Vendrame (ITA) Ag2r La Mondiale, all at same time
How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
SPECS
Engine: 4-litre V8 twin-turbo
Power: 630hp
Torque: 850Nm
Transmission: 8-speed Tiptronic automatic
Price: From Dh599,000
On sale: Now
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'Young girls thinking of big ideas'
Words come easy for aspiring writer Afra Al Muhairb. The business side of books, on the other hand, is entirely foreign to the 16-year-old Emirati. So, she followed her father’s advice and enroled in the Abu Dhabi Education Council’s summer entrepreneurship course at Abu Dhabi University hoping to pick up a few new skills.
“Most of us have this dream of opening a business,” said Afra, referring to her peers are “young girls thinking of big ideas.”
In the three-week class, pupils are challenged to come up with a business and develop an operational and marketing plan to support their idea. But, the learning goes far beyond sales and branding, said teacher Sonia Elhaj.
“It’s not only about starting up a business, it’s all the meta skills that goes with it -- building self confidence, communication,” said Ms Elhaj. “It’s a way to coach them and to harness ideas and to allow them to be creative. They are really hungry to do this and be heard. They are so happy to be actually doing something, to be engaged in creating something new, not only sitting and listening and getting new information and new knowledge. Now they are applying that knowledge.”
Afra’s team decided to focus their business idea on a restaurant modelled after the Leaning Tower of Pisa. Each level would have a different international cuisine and all the meat would be halal. The pupils thought of this after discussing a common problem they face when travelling abroad.
“Sometimes we find the struggle of finding halal food, so we just eat fish and cheese, so it’s hard for us to spend 20 days with fish and cheese,” said Afra. “So we made this tower so every person who comes – from Africa, from America – they will find the right food to eat.”
rpennington@thenational.ae
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
ICC Awards for 2021
MEN
Cricketer of the Year – Shaheen Afridi (Pakistan)
T20 Cricketer of the Year – Mohammad Rizwan (Pakistan)
ODI Cricketer of the Year – Babar Azam (Pakistan)
Test Cricketer of the Year – Joe Root (England)
WOMEN
Cricketer of the Year – Smriti Mandhana (India)
ODI Cricketer of the Year – Lizelle Lee (South Africa)
T20 Cricketer of the Year – Tammy Beaumont (England)
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
Paris Can Wait
Dir: Eleanor Coppola
Starring: Alec Baldwin, Diane Lane, Arnaud Viard
Two stars
KILLING OF QASSEM SULEIMANI
The biog
Favourite book: You Are the Placebo – Making your mind matter, by Dr Joe Dispenza
Hobby: Running and watching Welsh rugby
Travel destination: Cyprus in the summer
Life goals: To be an aspirational and passionate University educator, enjoy life, be healthy and be the best dad possible.
Killing of Qassem Suleimani
Killing of Qassem Suleimani
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments