Numbers & Statistics

Staff Concluding Statement of the 2020 Article IV Mission

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Via IMF (Den Internationale Valutafond)

Kuwait: Staff Concluding Statement of the 2020 Article IV Mission







January 27, 2020







A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.

The authorities have consented to the publication of this statement. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.










Subdued oil prices and output are weighing on near-term growth
prospects and external and fiscal balances. The current conjuncture and
the exhaustible nature of oil underscore the need to diversify the
economy and ensure adequate savings for future generations. While large
financial assets, low debt, and a sound banking sector underpin
Kuwait’s resilience, the recent run-up in spending has worsened the
fiscal position and eroded liquid buffers. Without a course correction,
the fiscal and financing challenges would intensify and the window of
opportunity to proceed at a measured pace would narrow.


The Kuwaiti authorities have embarked on financial and structural
reforms to boost private sector growth and employment of Kuwaitis. They
are undertaking reforms to improve the business climate, strengthen
competition, reduce the role of the state in the economy, deepen
capital markets, and foster the development of small and medium
enterprises. The needed fiscal adjustment however is proving difficult
due to opposition to reducing the public wage bill, subsidies, and
transfers, or introducing new taxes. To build broad support, the
adjustment should be: (i) designed in a growth-friendly and socially
equitable manner; (ii) supplemented by reforms to cut waste, improve
the quality of public services, and strengthen government
accountability and transparency; and (iii) accompanied by a vigorous
communication campaign.


The IMF mission highly values the candid discussions with the
authorities and expresses its gratitude for their hospitality and
excellent cooperation.

Recent Macro-Financial Developments

1. Nonoil growth strengthened in 2019, but lower oil prices and output are
weighing on the oil sector.
Nonoil growth was propelled by strong
government and consumer spending, the latter on the back of a credit
recovery. Oil output however is expected to contract by 1 percent, broadly
in line with the OPEC+ agreement. Taken together, this would bring overall
growth to about 0.7 percent in 2019 from 1.2 percent in 2018. The current
account surplus is estimated to have narrowed to 8½ percent of GDP in 2019
on account of lower oil exports. Inflation rose to 1.1 percent, reflecting
higher food and transport prices and slower housing rent deflation.

2. While the consolidated fiscal balance improved in FY2018/19, the
underlying fiscal position weakened.
The nonoil balance excluding
investment income fell by about 6 percentage points of nonoil GDP as
government spending rose significantly. It grew by almost 25 percent in
dinar terms from FY2016/17 to FY2018/19, mostly in hard-to-reverse
expenditure categories. The public wage bill has grown by about 6 percent
annually (despite low inflation) over the same period, as the government
was compelled to absorb new graduates into the already oversized public
sector. To make room for new labor force entrants, the retirement age for
civil servants was lowered by 5 years, widening the state pension fund’s
actuarial gap to about 45 percent of GDP.

3. Fiscal financing needs have remained large. The consolidated balance
after mandatory transfers to the Future Generations Fund (FGF) and
excluding investment income amounted to a deficit of about 8 percent of GDP
in FY2018/19. With the new debt law awaiting parliamentary approval, the
government has been unable to issue debt since October 2017. Instead, it
has continued to rely on the General Reserves Fund (GRF) for financing.

4. Kuwait’s financial assets continued to grow, but readily available
buffers declined.
According to the mission’s estimates, assets of the
Kuwait Investment Authority (KIA) surpassed 410 percent of GDP by end-2019,
as the FGF continued to receive mandatory transfers from the government and
generated strong returns on its assets. However, the continued drawdown
from the GRF for fiscal financing reduced its estimated total and liquid
balances to 56 and 24 percent of GDP by June 2019.

5. Credit has rebounded thanks to supportive prudential and monetary
conditions.
Credit growth accelerated, spurred by Central Bank of Kuwait’s
(CBK) decision in late 2018 to increase ceilings on personal loans and
supported by favorable monetary conditions. The CBK skillfully deployed
various monetary policy instruments to support lending to the economy while
maintaining the attractiveness of the dinar. As the Fed Funds rate rose in
2018, the CBK kept its policy lending rate unchanged (except in March),
raising only the repo rate (a benchmark for deposits). While the CBK
skipped the first two U.S. Federal Reserve interest rate cuts in 2019, it
followed suit after the October cut. As a result, bank lending rates have
remained broadly unchanged since 2018.

6. The banking system remains sound. The systemwide capital adequacy ratio
(CAR) reached 17.6 percent in September 2019, and banks have plentiful
short-term liquidity. Nonperforming loans net of specific provisions stood
at 1.2 percent, while loan-loss provisioning is high at 229 percent. Net
interest income has declined due to a narrowing spread between bank lending
rates and the cost of funds.

7. Equity markets outperformed. Equity markets have staged a recovery since
mid-2016, in part benefitting from portfolio inflows thanks to the
inclusion of Kuwaiti equities in the FTSE Russel and MSCI EM (expected in
2020) indices. MSCI Kuwait surged 29 percent in 2019, compared to 15
percent for MSCI GCC and MSCI EM, with market capitalization reaching an
all-time high of US$35 billion in December 2019.

Macroeconomic Outlook and Risks

Subdued oil prices and output are weighing on near-term prospects

8. Growth is expected to strengthen, but lower oil prices and uncertain
output cloud the outlook.
The mission’s projections are built on oil prices
declining from US$62 per barrel in 2019 to about US$56 per barrel in 2023
and remaining broadly unchanged thereafter. The mission has assumed a small
increase in oil output in 2020 consistent with the extension of the OPEC+
agreement through the year. Supported by government spending, employment,
and credit growth, nonoil GDP could expand by 3 percent in 2020 and
accelerate to 3½ percent over the medium term. With oil exports broadly
flat and imports rising, the current account surplus would dissipate over
the projection horizon. Inflation is expected to increase to 1.8 percent in
2020 as housing rents start to recover.

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9. Credit is expected to accelerate, and further capital inflows are
likely.
As growth strengthens and capital projects come on stream, credit
growth could pick up, supported by ample bank liquidity. The MSCI inclusion
in May is expected to bring in about US$3.5 billion inflows (2.3 percent of
GDP), of which US$2.6 billion would be passive inflows.

10. Risks to the outlook are to the downside, mainly from delays in reforms
and a sustained drop in oil prices.
Delays in fiscal reforms would further
amplify fiscal financing needs while slow progress on the structural front
would dampen growth. Weaker-than-expected global growth, including due to
escalating trade tensions, could drive oil prices lower. If so, the OPEC+
agreement may linger longer than expected, and the oil output recovery
projected after 2020 may not materialize. A sustained drop in oil prices
would generate unfavorable macro-financial dynamics, with weakening fiscal
and current account balances and widening financing needs. Heightened
security tensions and a challenging geopolitical environment in the region
could weigh on confidence, investment, and growth.

Fiscal and financing challenges would intensify without a course correction

11. Fiscal measures envisaged by the government in the near-term are
modest.
Given the challenging context, the government is focusing on
measures that are under its control and do not require legislative changes.
It has identified a menu of streamlining options, which include: (i)
closing loopholes in various social transfer programs, (ii) reprioritizing
capital expenditure, and (iii) reducing waste, including by improving
procurement. It also plans to raise nonoil revenue by: (i) introducing the
long-planned excise on tobacco and sugary drinks, (ii) repricing government
services, and (iii) strengthening revenue collection, especially utility
payments.

12. Against this backdrop, the government’s financing needs are projected
to grow rapidly.
The consolidated fiscal balance would turn from a surplus
of 5½ percent of GDP in 2019 to a deficit of a similar magnitude by 2025.
After compulsory transfers to the FGF and excluding investment income, this
would give rise to average annual financing needs of 20 percent of GDP or,
cumulatively, some KD55 billion (US$180 billion) over the next 6 years.

13. Covering such large financing needs will present a challenge. Under the
current arrangement with respect to the FGF and without recourse to other
financing sources, GRF’s readily available assets would be exhausted in
less than two years. Total KIA assets however would continue to increase.
The government is hopeful that parliament will approve the new debt law
this fiscal year, which is reflected in mission’s projections. This should
pave the way for the government to resume domestic borrowing almost
immediately and tap international markets next year. Borrowing would help
reduce drawdowns from the GRF allowing it to last longer. Assuming no legal
restriction on borrowing, to finance the remaining gap, government debt
would have to rise to over 70 percent of GDP in 2025 from 15 percent in
2019. While Kuwait’s very strong credit rating can underpin external
borrowing and ample bank liquidity can be tapped through domestic issuance,
the borrowing envelope over the medium term would be unprecedented.

Policy Discussions

A. Ensuring Long-Term Fiscal Sustainability

14. The mission underscores the urgency of adjustment to put the fiscal
position on a sounder path.
The looming depletion of liquid GRF assets is a
symptom of the fiscal position being too weak to meet savings obligations
with respect to the FGF. The mission estimates that larger transfers than
currently set aside in the FGF would be needed to ensure equally high
living standards for future generations. Even under an estimation approach
that allows the current generation to run a somewhat higher deficit (i.e.,
consume a higher share of oil wealth), the nonoil balance in FY2025/26
would fall about 16 percentage points of nonoil GDP short of the level
needed to ensure adequate savings for future generations. The mission
therefore calls for a well-paced fiscal adjustment over the medium term to
close this intergenerational savings’ gap and reduce financing needs.

15. The mission proposes an adjustment path that would close the
intergenerational savings’ gap in 10 years.
Under such scenario, total
spending would decline to about 75 percent of non-oil GDP (from 100 percent
now) – a level broadly consistent with that experienced during 2000-10. The
proposed adjustment would weigh on growth, but the effect would dissipate
over time as higher investment and structural reforms to unlock the private
sector’s potential bear dividends.

  • Curtailing the public wage bill over time. To achieve this, the
    availability and attractiveness of public sector jobs should be reduced
    by more closely aligning public sector wages with those in the private
    sector and containing future wage growth. Harmonizing the public wage
    grid structure, fostering merit-based compensation, and reducing the
    very high public-private wage premia would generate sizeable savings.
    It would also incentivize nationals to seek opportunities and create
    jobs in the private sector, thereby boosting competitiveness and
    productivity.
  • Phasing out generalized subsidies and reforming transfers. At almost 7½
    percent of GDP, fuel, electricity, and water subsidies and transfers
    are large. In addition to being costly to the budget, subsidies
    encourage excessive consumption and investment and disproportionately
    benefit the rich. Utility prices should be raised to cost recovery
    levels and various transfers rationalized through consolidation and
    strict eligibility enforcement. Doing so would result in savings and
    more efficient use of resources. Targeted cash transfers should be
    introduced in parallel to offset the adverse impact of reforms on
    lower-income households.
  • Increasing growth-enhancing public investment and improving its
    efficiency
    will be essential for closing infrastructure gaps with GCC
    peers and raising the long-term growth potential. This would also help
    counteract the drag on growth from fiscal consolidation. Higher capital
    spending should be accompanied by reforms focused on improving project
    selection, planning, and implementation.
  • Introducing a 5-percent value added tax (VAT) would broaden the tax
    base, yield stable revenue, help upgrade tax administration capacity,
    and contribute to a deeper understanding of the input-output structure
    of the economy. This would also bring Kuwait in line with Bahrain,
    Saudi Arabia, and the United Arab Emirates which have recently
    implemented the tax as part of the GCC-wide agreement.
  • Broadening the coverage of the profit tax and introducing excises on
    luxury goods.
    In addition to generating revenue, extending the business
    profit tax coverage to domestic companies would level the playing field
    and encourage FDI. Excises on luxury goods or, alternatively, a
    personal income tax on high earners would contribute to a more
    socially-balanced adjustment mix, helping increase its acceptance among
    the middle class.

16. The government needs to build consensus for fiscal adjustment. To gain
broad support, the proposed fiscal measures should be part of a
comprehensive reform package that fosters private sector growth and jobs,
reduces waste and improves the quality of public services, and strengthens
government accountability and transparency. Experience in other countries
shows the need for pro-active and transparent communication to explain the
rationale for adjustment, proposed measures, their expected costs and
benefits, including distributional impact.

B. Putting Robust Policy Frameworks in Place

Fiscal framework

17. The mission recommends adopting a rules-based fiscal framework. The
volatile and exhaustible nature of oil revenues poses a challenge to fiscal
policy due to the inherent tension between long-term savings and near-term
economic stabilization objectives. The current arrangement whereby 10
percent of revenue is transferred to the FGF, with remaining surpluses
going to the GRF, allowed Kuwait to accumulate substantial savings.
However, the arrangement does not ensure adequate savings for future
generations. It imposes no constraint on “above the line” fiscal policy,
with available financing acting as the only check.

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18. The mission discussed a menu of fiscal rule options with the
authorities.
A well-calibrated rule would ensure that future generations
enjoy a broadly similar standard of living as the current one. It would
also help insulate the economy from oil price fluctuations by preventing
spending run-ups during episodes of high oil prices and protect government
spending decisions from political pressures.The mission emphasizes that for
any rule to be effective, it should be enshrined in a sound institutional
framework that includes political commitment, sound public financial
management, comprehensive budget reporting, and transparent accounting
practices .

19. The current arrangement with respect to the FGF should be maintained
until a properly calibrated fiscal rule is firmly in place. 
Even as the
new rule is implemented, the stock of FGF assets should not be tapped. This
is crucial for preserving the nation’s oil wealth for future generations.
While the FGF was tapped for the reconstruction after the Iraq war, doing
so in normal times would set an unfortunate precedent and postpone fiscal
consolidation.

20. The mission encourages the authorities to continue strengthening fiscal
governance.
Addressing remaining governance weaknesses can help improve the
efficiency of spending and reduce vulnerabilities to corruption. The
authorities are strengthening independence and building capacity of the
Anti-Corruption Agency, which administers the asset declaration regime
where compliance reached 91 percent in 2019. The mission calls for renewed
efforts to accelerate the implementation of the procurement law adopted in
2017, including launching e-procurement. To that end, the government plans
to review procurement practices with the help of the World Bank. It is also
considering conducting a public expenditure review in the health sector.
Undertaking a public investment management assessment (PIMA) and a Fiscal
Transparency Evaluation would provide a comprehensive roadmap for
strengthening governance of public investment and fiscal transparency. The
mission encourages the authorities to further improve transparency of oil
wealth management, by disclosing information on the value chain from the
point of extraction to how revenues make their way through the government
and KIA’s financials.

21. There is a need to improve the management of fiscal risks stemming from
state-owned enterprises (SOEs) and public-private partnership (PPPs).
As a
first step toward enhanced oversight of SOEs, the Ministry of Finance (MoF)
should systematically analyze fiscal risks stemming from their activities,
including borrowing. The MoF should also gather comprehensive information
on PPPs and quantify related contingent liabilities.

Monetary and financial sector frameworks

22. The mission considers the pegged exchange rate regime to be
appropriate.
The peg to an undisclosed basket has provided an effective
nominal anchor and limited exchange rate flexibility during a period of
dollar strength. The pegged exchange rate puts a greater onus on fiscal
policy to support stability and facilitate external adjustment. The
mission’s external sector assessment shows that the estimated current
account gap would close under the proposed fiscal adjustment. The mission
notes that, as the economy becomes diversified, the arrangement should be
periodically reviewed to ensure that it continues to serve Kuwait well.

23. The mission commends the CBK for prudent regulation and supervision
which have helped keep the banking sector resilient.
The mission supports
CBK’s plans to conduct a comprehensive inventory of macroprudential tools
to ensure that they continue to promote financial sector resilience,
prevent buildup of systemic risks, and carefully balance financial
stability and growth objectives. Plans to upgrade stress-testing techniques
and early warning indicators are welcome. The mission supports the recent
decision to remove preferential (zero) risk weights for exposures to GCC
sovereigns in the calculation of risk-weighted assets.

24. The mission supports ongoing efforts to strengthen supervisory and
regulatory frameworks.
To enhance risk-based supervision, the CBK is
planning to better integrate its on- and off-site supervision functions,
including through cross-training of staff. The mission welcomes progress
towards establishing a centralized Shariah Board at the CBK, as this would
reduce risks from inconsistent interpretation of Shariah law in Islamic
banks.

25. The authorities should continue efforts to strengthen crisis management
and resolution framework.
Reforms should focus on revamping the existing
framework to promote orderly resolution of banks, reduce moral hazard,
promote market discipline, and help safeguard fiscal resources. To that
end, the authorities have prepared a draft law on banking resolution,
currently in the cabinet, and initiated internal discussions on the
appropriate setup for a deposit insurance scheme in Kuwait. To promote
greater coordination between agencies overseeing the financial sector, the
CBK has updated the memoranda of understanding with the Capital Markets
Authority and the Ministry of Commerce and Industry. A draft law, currently
in parliament, assigning the CBK an explicit financial stability mandate
and establishing a Financial Stability Committee (FSC) would create a more
structured framework for supervision and crisis resolution. Given the
banks’ dominant share in the financial system, the CBK should take a
leading role in the technical work of the FSC.

26. The mission sees scope to further enhance the liquidity management
framework.
With IMF assistance, the CBK has operationalized its liquidity
forecasting tool, including through formalization of information sharing
agreements with relevant entities. The mission is encouraged by progress in
extending the forecasting framework beyond the short-run horizon. This has
allowed the CBK to better anticipate potential system-wide pressures. The
mission recommends further refinements in the liquidity management
framework to allow market forces to play a bigger role in the pricing and
allocation of liquidity.

27. The mission recommends a gradual relaxation of lending rate caps. While
established corporations already borrow at below the applicable lending
rate cap, a gradual relaxation could expand access to credit to a wider
segment of the corporate sector and SMEs. It would also reduce
concentration of loans over time and promote lending at longer maturities,
which would encourage investment. The mission welcomes recent amendments to
the law on credit information that have enabled the credit bureau to start
gathering credit information on businesses and enhance data collection on
retail borrowers. As a comprehensive nationwide rating system is
established and banks are better able to price risk, the CBK could consider
gradually relaxing the interest rate cap on consumer loans as well. The
mission believes that the CBK has a wide menu of macro- and
micro-prudential tools to arrest potential risks to financial stability,
while its commendable efforts in strengthening consumer protection,
including by enhancing financial literacy, would help mitigate risk to
individual borrowers.

Statistics

28. The mission welcomes efforts to enhance the coverage and quality of
statistics.
The mission commends the Central Statistical Bureau (CSB) for
starting to disseminate quarterly national accounts data. The CSB is
conducting a household consumption and expenditure survey and laying the
groundwork for the 2020 establishment census, which will help to more
accurately capture economic activity and update the base year of the
national accounts.

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C. Promoting Private Sector-Led Growth and Economic Diversification

29. Weaning the economy off oil hinges on the emergence of a vibrant nonoil
sector that creates jobs for the growing labor force.
With scope for public
sector employment growth limited, the private sector needs to absorb most
of 100 thousand Kuwaiti nationals (22 percent of the current Kuwaiti labor
force) expected to enter the job market in the next 5 years. To tip the
balance toward greater private sector employment of Kuwaitis, the large
public-private wage premium should be reduced and accompanied by education
reforms to address skill mismatches. The mission welcomes authorities’
efforts to promote SMEs given their potential to create jobs, including
launching a comprehensive assessment of barriers to SME development.

30. Reducing the role of the state is paramount for improving economic
efficiency, competitiveness, and diversification.
The government is looking
into PPPs and privatization as a way to raise productivity and encourage a
greater role of the private sector. To ensure that PPPs provide value for
money, they must be implemented transparently and competitively, and fiscal
risks should be limited. The mission encourages the authorities to more
effectively address anti-competitive practices and promote competition,
including by empowering and strengthening the operational independence of
the Competition Promotion Agency. The competition framework should aim for
a “competitive neutrality” to even the playing field between private firms
and government-owned commercial entities which are currently exempt from
the competition law.

31. The mission welcomes sustained progress in improving the business
environment.
Kuwait jumped in the 2020 Ease of Doing Business ranking
thanks to improvements in starting a business, getting electricity, access
to credit, and trading across borders. The mission is encouraged by
authorities’ plans to further streamline registration, expedite the
issuance of business and import licenses, and remove regulatory barriers to
FDI. More action is needed to improve the efficiency of courts in ruling
over commercial cases and expedite contract enforcement. When passed, the
draft insolvency law that aims to revamp insolvency regulations and
modernize bankruptcy proceedings would remove an important obstacle to
doing business in Kuwait.

Table 1. Kuwait: Selected Economic Indicators, 2016‑25

Est

Projections

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Oil and gas sector

Total oil and gas exports (billions of U.S. dollars)

41.5

49.6

65.4

58.2

59.6

56.5

55.2

55.4

56.6

58.3

Average crude oil export price (U.S. dollars/barrel)

39.5

51.6

68.8

61.8

63.3

58.6

56.1

55.2

55.3

56.0

Crude oil production (millions of barrels/day)

2.95

2.70

2.74

2.70

2.70

2.76

2.81

2.87

2.93

2.99

(Annual percentage change, unless otherwise indicated)

National accounts and prices

Nominal GDP (market prices, in billions of Kuwaiti dinar)

33

37

42

41

43

43

45

46

49

51

Nominal GDP (market prices, in billions of U.S. dollars)

109

121

141

137

143

144

148

154

161

169

Real GDP 1

2.9

-4.7

1.2

0.7

1.5

2.7

2.7

2.7

2.7

2.7

Real oil GDP (including refineries)

3.9

-9.0

0.2

-1.0

0.3

2.0

2.0

2.0

2.0

2.0

Real non-oil GDP

1.4

1.8

2.7

3.0

3.0

3.5

3.5

3.5

3.5

3.5

CPI inflation (average)

3.5

1.5

0.6

1.1

1.8

2.5

2.5

2.5

2.5

2.5

CPI inflation (eop)

2.6

1.1

0.4

1.8

2.2

2.5

2.5

2.5

2.5

2.5

Unemployment rate (Kuwaiti nationals)

3.3

3.3

(Percent of GDP at market prices)

Budgetary operations 2

Revenue

52.7

58.3

60.9

59.9

58.0

55.6

54.0

52.8

52.2

51.2

Oil

34.4

37.8

43.7

40.6

39.6

37.0

35.2

34.2

33.5

32.9

Non-oil, of which:

18.2

20.5

17.2

19.3

18.4

18.7

18.8

18.7

18.7

18.2

Investment income

14.6

16.2

12.2

14.0

13.2

13.1

13.2

13.1

13.2

12.8

Expenditures 3

52.2

50.7

52.0

54.4

54.8

56.1

56.7

56.7

56.5

55.9

Expense

45.6

44.2

45.8

47.8

48.1

49.1

49.6

49.7

49.5

49.1

Capital

6.5

6.6

6.2

6.6

6.7

7.0

7.1

7.1

7.0

6.9

Balance

0.5

7.5

8.9

5.5

3.2

-0.5

-2.7

-3.9

-4.3

-4.8

Balance (after transfer to FGF and excl. investment income)

-17.9

-12.9

-8.2

-13.1

-14.5

-17.8

-20.0

-21.0

-21.4

-21.4

Domestic financing (net)

6.5

1.8

-2.7

0.1

3.5

3.4

3.3

4.4

4.2

4.0

External financing (net)

11.4

11.0

10.9

13.1

11.0

14.4

16.6

16.6

17.2

17.5

Non-oil balance excl. investment income (percent of non-oil
GDP) 4

-83.5

-85.5

-91.1

-89.6

-88.6

-86.4

-84.7

-83.2

-82.0

-80.7

Excluding oil-related subsidies and benefits (percent of
non-oil GDP)

-74.5

-76.6

-80.6

-80.1

-79.3

-77.9

-76.8

-75.6

-74.5

-73.4

Total gross debt (calendar year) 5

10.0

20.5

14.8

15.3

18.2

30.7

40.3

53.0

64.1

73.6

Estimated KIA assets

476.6

460.4

398.2

412.4

410.3

414.1

412.3

405.3

394.7

380.5

Net government financial assets

466.6

439.9

383.3

397.1

392.0

383.4

372.0

352.4

330.5

306.9

(Percent change; unless otherwise indicated)

Money and credit

Net foreign assets 6

8.7

-3.1

10.0

6.6

1.0

1.8

2.0

1.6

1.9

2.0

Claims on nongovernment sector

2.5

2.8

3.9

5.9

5.7

6.6

6.6

6.5

6.5

6.5

Kuwaiti dinar 3-month deposit rate (year average; in
percent)

1.1

1.5

2.3

Stock market unweighted index (annual percent change)

-0.2

12.8

11.8

(Billions of U.S. dollars, unless otherwise indicated)

External sector

Exports of goods

46.5

55.2

72.3

64.6

66.3

63.3

62.2

62.8

64.4

66.6

Of which:
non-oil exports

5.0

5.6

6.9

6.4

6.8

6.8

7.0

7.3

7.8

8.3

Annual percentage change

-15.7

11.7

22.3

-7.7

6.2

1.0

2.7

4.9

6.3

6.5

Imports of goods

-27.0

-29.5

-31.3

-32.5

-33.4

-34.7

-36.3

-37.9

-39.6

-41.0

Terms of Trade (ratio, annual percent change)

-12.5

27.1

19.9

-10.3

2.1

-5.8

-3.1

-1.8

-0.4

0.8

Current account

-5.1

9.6

20.4

11.6

11.6

6.7

3.7

2.2

1.7

1.5

Percent of GDP

-4.6

8.0

14.5

8.5

8.1

4.6

2.5

1.4

1.1

0.9

International reserve assets 7

31.2

33.6

37.2

39.7

41.1

42.8

44.8

46.4

48.3

50.4

In months of next year’s imports of goods and services

6.6

6.4

6.8

7.0

7.0

7.0

7.0

7.0

7.0

7.0

Memorandum items:

Exchange rate (U.S. dollar per KD, period average)

3.31

3.31

3.31

Nominal effective exchange rate (Percentage change)

0.9

0.8

-0.4

Real effective exchange rate (Percentage change)

2.7

0.8

-2.7

Sources: Data provided by the authorities; and IMF staff
estimates and projections.

1 Calculated on the basis of real oil and non-oil GDP at
market prices.

2 Based on fiscal year cycle, which starts on April 1 and
ends on March 31.

3 Starting FY2016/17, there has been a reclassification of
expenditure items.

4 Excludes pension fund recapitalization.

5 Excludes debt of Kuwait’s SWF related to asset management
operations.

 6 Excludes SDR holdings and IMF reserve position.
 7 Does not include external assets held by Kuwait Investment Authority.
IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Wafa Amr

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson








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