According to the IMF latest piece of news, Kuwait facing “lower-for-longer” oil prices from a position of strength, owing to large financial buffers, low debt, and a sound financial sector seems lately to be undergoing some radical changes in its regional and international stand.
This latter is notably allowing the country to sign for instance a $80m contract deals for five healthcare projects across Tunisia. By the same, it will also fund the development of two projects in Senegal and Mali, worth $73m. Could this be read as some sort of a trend to come?
How does Kuwait manage all that? The IMF again in the same message finds that whilst the government was adjusting to the new oil price reality of today, it rapidly felt the need for a vibrant private sector employing more Kuwaiti nationals and therefore engaged into laying out a comprehensive reform strategy. It has already taken welcome steps to curtail spending and foster an environment more conducive to the private investment.
The IMF recent Macro-Financial Developments found that first all non-oil growth has picked up modestly over the recent past and that inflation was moderately impacted.
Kuwait government’s underlying fiscal position has improved on the back of spending restraint, but financing needs have remained large.
Does all this mean that Kuwait is in a way trying its luck in becoming some sort of regional financial center. The banking sector that remained sound, and credit growth mildly slowing down, would want to go down that way. All macro-financial outlook and risks would according to the IMF above mentioned be in favour to that.
The reasons are :
Away from the financial world, Kuwait although remaining exposed to relatively external and domestic risks by itself has in interposing in the recent crisis between Qatar and its neighbours’ blockade gained a tremendous goodwill in its region and beyond.
Manama, Bahrain and Dubai of the UAE were for a long time trying to claim that status but in vain. Would Kuwait get therre?