Economic cracks begin to show following delays to critical reforms and projects
But they date back further. Since 2015, Kuwait’s cabinet has promised to deliver economic reforms aimed at creating a dynamic, business-friendly economy. It has established a new body to oversee public-private partnership (PPP) projects, and set major civic infrastructure projects in motion. Unfortunately for contractors, businesses and the economy at large, very little of what was pledged has been brought to tender or awarded.
There may be many good reasons for this. For instance, the task of formulating an appropriate framework for PPP projects in any sector in any country can be a laborious one. For the Umm al-Hayman wastewater project signed last year, financial close is still under way 12 months later.
It is certainly important for governments to be deliberate in their sign-off of projects that entail guarantees and commitments that can last for decades. Yet there are growing signs that, at least in some regards, the Kuwaiti government is at risk of behaving too cautiously.
The country’s projects market has declined consistently year-on-year since 2015. In 2020, several major active oil schemes are due to draw to a close, including the $12bn Clean Fuels Project, which is set to complete in April, and the $16bn Al-Zour refinery, which should become partially operational in June. The completion of these projects will leave a vacuum in the oil sector, as there are no equivalent schemes in the upcoming project pipeline that could serve to meaningfully act as a replacement.
Kuwait Authority for Partnership Projects (KAPP) is eager to move forward with many of its projects, and Kuwait’s banks also appreciate the country’s need for greater participation by local institutions in PPP projects, and increasingly see the positives in committing to long-term local project finance.
Government delivery is key. Whether the stumbling block is at a ministerial, parliamentary or lower level, Kuwait increasingly needs decisive government action, and far swifter implementation moving forward if it is to achieve its socio-economic objectives.
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