Kuwait infrastructure spending must continue

20 January 2015

Capital investment programme likely to continue despite limited revenues from falling oil prices

Kuwait is expected to continue spending on infrastructure as the government continues to drive ahead with much needed road and transport projects.

The government must maintain infrastructure spend says Tarek Shuaib, managing partner of engineering and planning firm Pace. 

Shuaib tells MEED that while it is understandable for Kuwait to limit public spending, it is assumed the government will continue with infrastructure spending. “Some of the key projects will definitely go on. The ones which are already under construction will not be affected because they are all vital to the country’s development. Some of the megaprojects related to oil and gas which are already signed are also proceeding,” he says.

Current infrastructure projects in Kuwait include the Bubiyan Port, the Kuwait Metro and the Sabah al-Ahmad Future City project, which are all expected to proceed in 2015.

Shuaib refers back to the late 1990s when the government drastically cut spending because of plummeting oil prices and claims that this was a mistake and will not be repeated. “The key infrastructure projects should not be stopped. In 1998 the price of oil was down also, and at the time the government suspended many projects and that wasn’t good. They have a lot of surplus collected over the past few years and they have to commit to the development plan of 2015-2020. “

“Over the past three to five years Kuwait has been focusing on improving its infrastructure spending.”

“As a result of the implementation of key highway and infrastructure projects, Kuwait is much better positioned than the late 90s and early 00s. This is especially true for the northern part of Kuwait with more housing and commercial facilities emerging.”

As GCC governments start reallocating budgets depending on priorites, it seems that unlike Saudi Arabia, which has commited to social and education spending, Kuwait is going to continue its focus on infrastructure by looking at reducing spending elsewhere.

Although Kuwait’s finances are robust, several senior officials have spoken out ahead of its 2015 budget announcement, warning that subsidy cuts need to be implemented. It remains to be seen whether these reforms will materialise, although they are looking more likely as officials seek better ways to reduce government spending in order to alleviate volatile oil prices without impacting major projects and foreign investment.

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