Kuwait must curb spending: IMF chief
Kuwait, November 11, 2013
Kuwait should contain current expenditures such as the public sector wage bill and generalised subsidies, and find ways to enhance non-oil revenues, to overcome the risk from eroding buffers, said a top official.
The challenges can be overcome with strong policy frameworks and fiscal insitutions to guide public spending and the medium-term fiscal consolidation process, said IMF managing director Christine Lagarde, during her recent visit to Kuwait.
The country has navigated the global crisis well and its macroeconomic performance remains strong, she said. However, spending rigidities and a growing reliance on oil revenues have increased fiscal risks, notwithstanding the current high fiscal surplus and large buffers.
During the visit, Lagarde met with HH Sheikh Sabah Al-Ahmad Al-Sabah, the Emir of Kuwait, and discussed recent developments in the region, besides the global and domestic economic situation.
“We exchanged views on the important role Kuwait plays in regional economic developments. I conveyed my gratitude to Kuwait for its support of its Arab neighbours facing challenging transitions and underlined the IMF’s efforts to encourage the international community to provide additional assistance,” said Lagarde.
She appreciated the commitment by Kuwait and other countries of the GCC to ensure that the IMF’s resources are sufficient to help all members in need.
Lagarde also met Finance Minister Sheikh Salem Abdulaziz Al-Sabah and the governor of the Central Bank Dr Mohammed Al-Hashel, and discussed recent developments, economic priorities and the outlook for Kuwait.
Additionally, she met with some leading Kuwaiti women, members of the private sector, and students at Kuwait University. “Our vibrant exchange of views gave me a better sense of the changes that have taken place in the country since my last visit,” she said.
Regarding her speech at the newly created Central Bank Symposium, Lagarde said: “My main message for Kuwait, and its Gulf neighbours, was that the region has made good progress and needs to build on its gains—the time to plan for the future is now. I greatly appreciate our close cooperation with the GCC countries and look forward to working together on addressing the challenges facing the wider region.
Lagarde released a book on the ‘Macroeconomics of the Arab Countries in the Gulf’ written by an IMF staff, which marks an important contribution for the IMF in its operational work in the GCC region.
“I would like to express my appreciation to the Kuwaiti authorities and people for their hospitality and warm welcome, and I reiterate the IMF’s readiness to help the Kuwait economy in areas of its expertise,” she added. - TradeArabia News Service