Kuwait’s economy suffers from glaring structural errors induced by accumulations that have stalled development, Finance Ministry Undersecretary Khalifa Hamada said.
Hamada, speaking on behalf of Finance Minister and acting oil minister Anas Al-Saleh at the Euromoney 2016 Conference, said that these glitches are related to governmental procedures, adding that bureaucracy has encumbered economic production, KUNA reported.
Moreover, Hamada noted that the flaws are also the result of irregularities in the job market, saying that the government has struggled to provide employment for nationals.
Speaking on the primary factor that has impeded growth, Hamada said that the nation’s budget heavily relies on oil revenues, an issue that if not remedied, would be detrimental to the country’s economy.
He also noted that public spending should center on efforts to maximize production capacity to ensure sustained development.
On the government’s role in developing the economy, he said that it should monitor economic procedures and enhance collaboration with the private sector, which would result in a robust market that will keep consumers satisfied.
He also urged the private sector to contribute to economic growth through public projects and increased cooperation with the government sector, adding that citizens should own a 40% share of these projects.
Meanwhile, Governor of the Central Bank of Kuwait, Dr. Mohammad Al-Hashel, said local banks have hitherto been able to withstand the oil market’s recent slump, but this resilience is not “infinite”.
Hashel said that the lackluster economy will prove to be a burden to local banks, despite CBK’s strenuous efforts to maintain monetary and financial stability.
Moreover, he said, financial regulations are not adequate as they are geared towards the economy as a whole, adding that local banks are merely a component of the country’s economy and stability there does not equate to economic growth.
Speaking on Kuwait’s low public debt and financial buffers, he noted that they provide an opportunity for progressive economic reforms.
Furthermore, Hashel said that local banks have remained stable, despite a challenging economic environment, noting that banks’ non-performing loan ratio has continued its steady decline to reach an all-time low of 2.4%.
Similarly, he pointed out that the coverage ratio has climbed to a record high of 204% and that banks are well above the minimum benchmark of 100% liquidity needed by the year 2019, adding that banks’ overall leverage ratio of 9.7% is significantly higher than the 3% global benchmark.
