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2019-04-05 09:45:00

KUWAIT'S GDP UP 1.7%

KUWAIT'S GDP UP 1.7%

IMF- On March 25, 2019, the Executive Board of the International Monetary Fund (IMF) concluded the 2019 Article IV consultation with Kuwait. The discussion included the Financial System Stability Assessment (FSSA) of Kuwait.

Growth has resumed, and the current account rebounded thanks to higher oil prices. Hydrocarbon output rose by 1.2 percent in 2018 after contracting a year earlier. Buoyed by a rebound in confidence and government spending, non-oil growth has accelerated to 2.5 percent. After the first deficit in more than two decades in 2016, the current account shifted back into surplus in 2017 and reached an estimated surplus of 12.7 percent of GDP in 2018. Inflation fell to a multiyear low of 0.7 percent due to falling housing rents, easing food prices, and a strengthening dinar.

While the overall fiscal balance has improved, financing needs remain large. Higher oil revenues and investment income boosted the overall balance. However, the underlying fiscal position—non-oil balance less investment income in percent of non-oil GDP—indicates a modest loosening in FY17/18 and FY18/19. Fiscal financing needs—overall balance after compulsory transfers to the Future Generations Fund (FGF) and excluding investment income—remain large. Delays in the passage of a new debt law have rendered the government unable to issue debt since October 2017. As a result, it has had to draw on the General Reserve Fund assets for financing.

The banking sector reports sound indicators, and credit is recovering from a slow start in 2018. The systemwide capital adequacy ratio reached 18 percent in September 2018, and liquidity ratios were comfortably within regulatory requirements. Profits rose and asset quality improved, with NPLs net of specific provisions falling to a historical low. The Central Bank of Kuwait (CBK) raised the repo rate, a benchmark for deposits, several times but has kept the policy lending rate at 3 percent since March 2018. As a result, bank lending interest rates have risen by less than deposit rates. Coupled with ample liquidity—a by-product of deposit growth and government debt redemption in 2018—this is supporting a credit recovery. Private sector loans grew 4.1 percent year-on-year in December 2018 on the back of household, construction, and oil sector borrowing.

Executive Board Assessment 

Executive Directors noted that growth is expected to strengthen and the underlying fiscal position to gradually improve over the medium term. Given the volatility of oil prices and the exhaustible nature of oil resources, Directors underscored the need for timely and well-sequenced fiscal and structural reforms to reduce Kuwait's dependence on oil, boost government saving, and create more private sector jobs.

Directors called for deeper fiscal reforms to ensure adequate savings for future generations. They encouraged the authorities to tackle spending rigidities and increase non-oil revenue while boosting capital outlays to improve infrastructure and raise potential growth. They underscored the need to tackle the large public sector wage bill, noting that public sector wages should be gradually aligned with those in the private sector to incentivize nationals to seek private sector opportunities and support competitiveness. Directors also encouraged the authorities to proceed with the introduction of GCC-wide excises and VAT.

Directors emphasized that a robust fiscal framework and strong fiscal governance are vital to bolstering fiscal policy credibility. Directors stressed that enhanced fiscal transparency, an improved public procurement framework, and greater spending efficiency would help increase government accountability, cut waste, and reduce Kuwait's vulnerability to corruption.

Directors welcomed the banking system's sound position and commended the authorities for prudent regulation and supervision. To further enhance financial sector resilience, Directors encouraged the authorities to implement the recommendations of the FSSA. In particular, they saw scope to further enhance the crisis management framework, notably by establishing a special resolution regime for banks and unwinding the blanket guarantee of deposits once the preconditions are met. They also encouraged the authorities to strengthen liquidity management, bolster systemic risk oversight, and called for a gradual relaxation of the interest ceilings. Directors encouraged the authorities to further strengthen the AML/CFT framework.

Directors stressed the need for structural reforms to improve the business environment, support entrepreneurship, and foster productivity. In particular, they saw scope for further easing of administrative procedures, facilitating trading across borders, and efforts to promote competition. They also called for a more enabling environment for SMEs and startups, by enhancing their access to finance, facilitating participation in public tenders, and training entrepreneurs.

Directors concurred that the pegged currency regime remains appropriate, with the peg to a basket of currencies continuing to provide an effective nominal anchor. Directors noted that the recommended fiscal adjustment would largely close the current account gap over the medium term.

Kuwait: Selected Economic Indicators, 2014–24

     
         

Est.

Projections

 
 

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

                       
                       

Oil and gas sector

                     

Total oil and gas exports (billions of U.S. dollars)

97.6

48.5

41.5

49.6

65.7

58.3

59.6

60.2

60.9

62.1

63.6

Average oil export price (U.S. dollars/barrel)

96.5

49.0

41.0

53.4

70.6

61.5

61.4

60.6

60.1

60.2

60.6

Crude oil production (millions of barrels/day)

2.87

2.86

2.95

2.70

2.74

2.79

2.86

2.93

2.99

3.05

3.11

     

National accounts and prices

(Annual percentage change, unless otherwise indicated)

Nominal GDP (market prices, in billions of Kuwaiti dinar)

46

34

33

36

43

41

43

45

47

49

52

Nominal GDP (market prices, in billions of U.S. dollars)

163

115

109

120

141

137

143

150

156

163

172

Real GDP 1

0.5

0.6

2.9

-3.5

1.7

2.5

2.9

2.9

2.5

2.7

2.9

Real oil GDP

-2.1

-1.7

3.9

-7.2

1.2

2.0

2.5

2.5

2.0

2.0

2.0

Real non-oil GDP

4.9

4.2

1.4

2.1

2.5

3.0

3.5

3.4

3.2

3.7

4.0

CPI inflation (average)

3.1

3.7

3.5

1.5

0.7

2.5

2.7

4.7

3.9

3.0

3.0

Unemployment rate (Kuwaiti nationals)

5.0

4.7

3.3

3.3

...

...

...

...

...

...

...

                       

Budgetary operations 2

(Percent of GDP)

Revenue

67.4

52.3

52.8

58.9

60.9

58.6

58.0

58.7

57.2

55.8

54.6

Oil

51.9

35.4

34.5

38.0

43.7

40.1

39.2

37.8

36.8

35.9

35.1

Non-oil, of which:

15.4

16.9

18.3

20.9

17.1

18.4

18.9

20.8

20.4

19.9

19.4

Investment income

10.6

13.3

14.6

16.5

13.0

13.9

14.3

14.7

13.9

13.5

13.0

Expenditures 3

48.8

52.7

52.3

50.8

48.3

50.5

51.0

51.9

51.9

51.7

51.1

Expense

43.3

45.0

44.2

42.6

40.6

42.3

42.6

43.3

43.4

43.1

42.7

Capital

5.4

7.7

8.1

8.2

7.7

8.2

8.4

8.6

8.6

8.5

8.4

Balance

18.6

-0.3

0.5

8.1

12.6

8.0

7.0

6.7

5.2

4.2

3.4

Balance (after transfers to FGF and excl. investment income)

2.3

-17.5

-17.9

-12.6

-5.2

-10.4

-11.6

-12.3

-13.0

-13.5

-13.7

Non-oil balance excl. investment income

(percent of non-oil GDP) 4

-102.5

-88.3

-83.8

-86.5

-87.8

-85.7

-84.7

-81.3

-78.9

-77.2

-75.3

Excluding oil-related subsidies and benefits

(percent of non-oil GDP)

-81.2

-77.5

-74.8

-77.4

-77.2

-76.4

-75.8

-72.8

-70.8

-69.3

-67.7

Total gross debt (calendar year) 5

3.4

4.7

10.0

20.7

14.8

17.8

21.0

26.2

31.1

34.7

38.4

                       

Money and credit

(Percent change; unless otherwise indicated)

Net foreign assets 6

3.6

-2.1

8.7

-3.1

10.0

2.7

5.6

7.5

6.1

6.5

6.9

Claims on nongovernment sector

5.2

7.6

2.9

2.8

4.1

6.1

6.7

8.0

7.2

7.1

7.4

Kuwaiti dinar 3-month deposit rate

(year average; in percent) 7

0.8

0.8

1.1

1.5

2.3

...

...

...

...

...

...

     

External sector

(Billions of U.S. dollars, unless otherwise indicated)

Exports of goods

104.5

54.5

46.5

55.1

71.6

64.6

66.3

67.3

68.4

70.2

72.3

Of which: non-oil exports

7.0

6.0

5.0

5.6

5.9

6.3

6.7

7.1

7.5

8.1

8.7

Annual percentage change

-2.8

-14.1

-15.7

10.6

6.6

6.2

6.1

6.1

6.1

7.1

8.1

Imports of goods

-27.0

-26.5

-27.0

-29.5

-31.3

-32.5

-33.7

-35.2

-36.6

-38.2

-40.1

Terms of Trade (ratio, annual percent change)

-12.2

-42.5

-12.5

21.9

23.1

-11.0

0.1

-0.7

-0.2

-0.3

0.1

Current account

54.4

4.0

-5.1

7.1

18.0

10.2

11.4

11.9

10.4

10.0

9.5

Percent of GDP

33.4

3.5

-4.6

5.9

12.7

7.4

8.0

8.0

6.6

6.1

5.5

International reserve assets 8

32.3

28.3

31.2

33.5

37.0

37.2

38.8

41.1

43.0

45.3

47.9

In months of next year's imports of goods and services

7.4

6.5

6.5

6.6

7.0

6.8

6.8

7.0

7.0

7.1

7.2

                       

Memorandum items 7:

                     

Exchange rate (U.S. dollar per KD, period average)

3.52

3.32

3.31

3.31

3.31

...

...

...

...

...

...

Nominal effective exchange rate (Percentage change)

1.5

3.1

0.9

0.8

-0.4

...

...

...

...

...

...

Real effective exchange rate (Percentage change)

2.0

5.0

2.7

0.8

-2.7

...

...

...

...

...

...

                       
   

Sources: Data provided by the authorities; and IMF staff estimates and projections.

 

1 Calculated on the basis of real oil and non-oil GDP at factor cost.

 

2 Based on fiscal year cycle, which starts on April 1 and ends on March 31.

 

3 Starting FY 2016/17, there has been a reclassification of expenditure items.

 

4 Excludes investment income and pension fund recapitalization.

 

Excludes debt of Kuwait's SWF related to asset management operations.

 

6 Excludes SDRs and IMF reserve position.

 

7 For 2018, based on latest available data.

 

Does not include external assets held by Kuwait Investment Authority.

 
                             
 

----- 

Earlier:  

 KUWAIT'S GDP GROWTH 2.5-2.9%
2019, January, 30, 11:00:00

KUWAIT'S GDP GROWTH 2.5-2.9%

IMF - Kuwait's growth is expected to strengthen. The mission has assumed an average oil price of US$57 per barrel in 2019–20, increasing to US$60 per barrel over the medium term. 

 
 KUWAIT OIL PRODUCTION 2.8 MBD
2018, August, 3, 09:45:00

KUWAIT OIL PRODUCTION 2.8 MBD

PLATTS - Kuwait's crude oil production currently stands at 2.8 million b/d, the country's oil minister Bakheet al-Rashidi said Wednesday, up about 90,000 b/d from June levels.

 
 KUWAIT'S INVESTMENT $113 BLN
2018, April, 18, 13:02:00

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AOG - Kuwait plans to invest $113bn over the next five years to enhance oil exploration and production activities both inside and outside the country

 
 SHELL - KUWAIT LNG
2017, December, 25, 20:10:00

SHELL - KUWAIT LNG

BLOOMBERG - Kuwait Petroleum Corp. signed a 15-year liquefied natural gas import deal with Royal Dutch Shell Plc to help the oil exporting nation meet growing domestic energy demand.

 
 HIGH LEVEL OF CONFORMITY
2017, March, 27, 18:55:00

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The Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) convened in Kuwait City for its second meeting on 26 March 2017. It announced that, based on the Report of the Joint OPEC/Non-OPEC Technical Committee (JTC) for the month of February 2017, OPEC and participating non-OPEC countries have continued their progress towards full conformity with their voluntary adjustments in production.

 
 KUWAIT'S DEFICIT: $18.2 BLN
2016, July, 6, 18:05:00

KUWAIT'S DEFICIT: $18.2 BLN

Kuwait's budget deficit reflects the impact lower oil prices have had on crude exporters, particularly Gulf Arab monarchies that rely on oil revenues to support generous subsidies, welfare benefits and public sector wages.

 
 СОТРУДНИЧЕСТВО РОССИИ И КУВЕЙТА
2015, November, 12, 20:00:00

RUSSIA & KUWAIT COOPERATION

Russia’s President Vladimir Putin met with Emir of Kuwait Sabah Al-Ahmad Al-Jaber Al-Sabah this week to discuss opportunities for cooperation in the fields of energy and diplomacy. The two countries also signed a memorandum for military technical cooperation.

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