What will become of Kuwait?

Kuwait has fallen behind its neighbours in the Gulf, despite its abundant petrodollars and a timeline that could see the country post its first deficit in 2017. As a result, the voices of dissent are growing louder

The International Monetary Fund warns that by as early as 2017, Kuwait’s oil revenues will no longer out-weigh its spending, causing the first deficit since 1998

The International Monetary Fund warns that by as early as 2017, Kuwait’s oil revenues will no longer out-weigh its spending, causing the first deficit since 1998

There is a distinct air of frustration swilling around in Kuwait City. The oil-rich Gulf capital has long benefitted from a stream of black liquid cash that has kept its books in check for fourteen years, but it has little to show for it and with the gravy train expected to slow well before the end of the decade, those with any sense of forward thinking are begging the question: what will become of Kuwait?

“The reliance on oil is quite dangerous. I think we have completely failed in addressing this major imbalance,” chairman of Kuwait Banking Association (KBA) and Ahli United Bank, Hamad Al Marzouq said during a recent finance conference.

“We lack a clear strategic vision here in Kuwait.”

While its neighbours Qatar and the UAE have ploughed much of their oil wealth into investments as varied as ambitious real estate developments, landmark buildings in Europe, sports sponsorship and major new infrastructure projects such as solar power systems, Kuwait has been the sleepy cousin in a corner of the Arabian Peninsula.

Little new infrastructure including roads, ports and airport facilities has been built or renovated for years, while the nation is known for little more than oil and its war with Iraq.

And time is running out for Kuwait to make the most of its spoils. The International Monetary Fund warns that by as early as 2017, the country’s oil revenues will no longer out-weigh its spending, causing the first deficit since 1998. The IMF forecasts that in 2017-2018 Kuwait’s oil revenues will be about KD25bn ($87.9bn) compared to KD29bn in spending.

“Kuwait is at a crossroads for conserving wealth [for] the future,” IMF deputy division chief of the Middle East and Central Asia Department, Ananthakrishnan Prasad says. “Our estimates shows that government expenditure will exhaust all oil revenues by 2017, which means no portion of these oil revenues would be available for future generations.

“There has to be a shift in policy in Kuwait and Kuwait will have to start saving more and have to start reducing their spending.”

There is also the risk of an even earlier oil price shock or prolonged decline.

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Posted by: Kaptain Mirza

Let Kuwaitis feel how expats feel. What goes around comes around..!!

Posted by: Sam from Canada

Merge with Saudi Arabia...

Posted by: Sam from Canada

@Sanjay...Why do you say that? If the GCC is what its supposed to be, then let all these states become a federation, as they are already ONE nation anyways with similar cultures, religion, etc. Its high time that the lines the Brits drew arbitrarily on maps dividing nations (around the world) should be eradicated. You seem to be from India, so I would share my opinion that India, Pakistan and Bangladesh should also go down the same route...in unity there is strength. And Kuwait merging with Saudi is much better than it becoming (yet again) Iraq's 19th province, as it historically had been for centuries.

Posted by: Sanjay

GTH Sam from Canada. That is the last thing Kuwait needs to do.

Posted by: Q80 & Mad

I hope that this report is a wake up call for the Kuwaiti Government and its citizens to pick up the pace and minimize all the wastage that's taking place. Start enforcing the law to the full extent, train Kuwaitis to learn skills that the expat labor force have acquired, punish theft and ineffective management at all levels, have a strategic vision that remains intact for at least the next 10 years, make the Government accountable for their failures/promises, and put the most qualified employees in the right jobs regardless of their connections, family names, etc.

Posted by: Kaptain Mirza

Kuwait is a great place to live in. Once the oil is over, it would be much cheaper to stay there.

I miss Kuwait dearly..!!

Posted by: jay

well i suppose the comments reflect the real picture if your a kuwaiti getting a great salary secure job in the government debts paid off your on the side of status quo as they only think short term and very selfishly
if your an expat who are nearly 3m compared to the 1 million kuwaitis you ask a number of questions
why do you want to lose 100,000 expats a yr the jobs that go will not be filled by Kuwaitis
the expat is not made welcome but in fact creates the wealth in the first place
a few ideas to gererate growth currently expats cant own houses so let the buy this would retain the money in the country and create more wealth
open up busiess you need a kuwaiti parner to operate why??? to protect the wealth of the many the 6 big families have over 50% of the companies and wealth
allow expats to own businesses and create jobs the culture is we all are employees
sort the residency issues of fake companies and wrongdoing
make major companies comply to law and stop corruption

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