KUWAIT CITY, Feb 22: Two experts have underscored the urgent need for Kuwait to expedite the implementation of economic projects to tackle its growing budget deficit. The Ministry of Finance has projected a KD 6.3 billion deficit in the upcoming budget, with oil revenue barely covering salary expenditures and non-oil revenues continuing to decline. The experts warned that Kuwait’s ongoing dependence on oil revenue — a commodity subject to international price fluctuations — poses significant risks. They suggested that borrowing from abroad, following the issuance of the Public Debt Law Decree, could be a viable option; provided the funds are used effectively.

Businessman and economic expert Qais Al-Ghanim agreed that utilizing public debt to finance development projects is not inherently problematic, as long as the projects generate sufficient returns to allow the government to repay the debt. He emphasized the importance of conducting thorough studies to ensure that borrowed funds are allocated wisely. He also recommended that the State evaluate its assets and consider putting them under a specialized body to improve Kuwait’s credibility with international financial institutions. Both Al-Ghanim and economic expert Dr. Salah Borsali stressed the need for Kuwait to diversify its economy to reduce reliance on oil. Borsali proposed using profits from the State’s trillion-dollar sovereign fund to support local projects. While recognizing that borrowing is common even in strong economies like the United States, he stressed that borrowed funds should be invested in projects that strengthen Kuwait’s economic and service infrastructure.

Al-Ghanim voiced concerns about the entry of foreign investments into Kuwaiti bank shares and the exit of private companies to neighboring countries. He attributed these trends to the absence of taxes in Kuwait’s financial system and the lack of a favorable investment environment for the private sector. He also pointed out that banks are not providing sufficient loans for construction projects, and that private sector capital is often invested abroad due to higher returns. He suggested that raising government service fees could improve the budget, although he acknowledged that it would take time for the government to realize profits from its development projects. Borsali recommended opening the door to foreign labor in the private sector to support the execution of development projects and bolster the national economy. In general, these experts’ recommendations emphasize the urgent need for Kuwait to address its financial challenges through strategic investments, a more diversified economy, and a more attractive business environment for both local and foreign investors.

By Najeh Bilal
Al-Seyassah/Arab Times Staff