By Claire Ferris-Lay
Sheikh Salem Abdulaziz Al Sabah has been in the post for over 25 years
Kuwait’s Central Bank Governor has resigned in protest over the Gulf state’s rising spending and its impact on the economy, local media reported on Monday.
Sheikh Salem Abdulaziz Al Sabah, who has been in the post for over 25 years, quit after “objecting to the negative developments in the state's fiscal policy and its dangerous consequences on the national economy,” Al Qabas newspaper said without citing where it got the information.
Sheikh Salem was behind the key decision in 2007 to break ranks with other Gulf Arab oil producers and de-peg its dinar from the US dollar in a bid to contain the impact of rising import costs on inflation.
Kuwait, one of the world’s top oil exporters, has more than tripled its spending in the last six years from $23bn to over $70bn. The Gulf state in June approved a $71bn state budget for the 2011/12 fiscal year, the biggest since at least 2003.
Sheikh Salem in July said Kuwait needs to increase government spending and support the private sector to overcome imbalances in its economy.
“There are three structural imbalances in the Kuwaiti economy... [including] the government’s dominance of economic activity... the private sector investor needs to be given a chance and that will reflect positively on the state’s budget,” he said.
“Without majorly improving the business environment, and urgent and quick capital spending, there will be no growth, and without giving the private sector a chance, the future outlook will be limited,” he added.
As of 2009, its investment rank was a dismal 141st globally, making up 13.9 percent of its $148bn-a-year GDP. Foreign Investors lack confidence in this country which has been experiencing extreme political and socioeconomic instability fluctuations going back to Iraqâ€™s invasion in 1991 â€” and even before. When an international investor looks at the country, they look at it with a high degree of risk and that has to do with the inability of the political system to deliver on proposed economic projects and promises. From a collapsed stock market to an overwhelming supply of office space in a run-down capital, Kuwait City, Kuwait has got to diversify it's economy and jump start the development process.