IMF says economy is well placed to mitigate challenges
The Washington-based IMF said that Kuwaits economy is well positioned to mitigate the impact of lower oil prices as it concluded the Article IV consultation with Kuwait in early January.
The IMF did warn that Kuwaits fiscal and external positions have deteriorated and non-hydrocarbon growth has moderatedfrom 5 per cent in 2014 to about 3.25 percent in 2016 as a result of lower oil prices.
Kuwait is able to mitigate these challenges because it has large financial buffers and low levels of debt which allow it to implement economic reforms, such as removing subsidies and introducing value-added tax, gradually while simultaneously increasing public investment to support growth.
The IMF expects Kuwaits fiscal and external positions to improve as oil prices recover, and non-oil GDP growth is expected to accelerate to 4 per cent over the medium term support by the governments five-year Development Plan.
In mid-January, Kuwait was reported to be meeting with bankers to finalise the plans for its dollar-denominated debut bond sale to help it shore-up cash in the wake of dwindling oil revenues.