Kuwait’s Minister of Finance, Anas Al-Saleh, has reiterated that the recent referendum in Britain, which resulted in a vote favoring exiting the European Union (EU), will have only a limited impact on Kuwait’s investments in the United Kingdom.
Addressing a cabinet meeting, called to discuss the country’s investments in the United Kingdom in the wake of a vote that rattled global financial markets and pushed the British pound to its lowest level in 30 years, Minister Al-Saleh said Kuwait’s investments in Britain were “high-quality and long term”.
The minister was quoted as saying that Kuwaiti investments in Britain are considered tangible assets in real estate, infrastructure and government stocks and bonds. They are high-quality and long-term investments that would be impacted only to a limited extent by any decision of the United Kingdom to leave the EU.
The Kuwait Investment Authority (KIA) which, according to the Sovereign Wealth Fund Institute (SWFI), is reported to have US$592 billion in assets under management, is also a major investor in the United Kingdom though its London-based Kuwait Investment Office and is said to have more than doubled its investment in Britain to around $24 billion in the past ten years.
Kuwait owns London landmarks such as the More One riverside development which houses the headquarters of the mayor, as well as buildings in Canary Wharf. It has focused on infrastructure investments through its Wren House Infrastructure Management arm, set up in 2013.
While noting that the direct effects of a drop in the British pound and interest rate pricing following Brexit could have a bearing on investments, the minister said that Kuwait's central bank was ready to ensure financial stability in the country.
With regard to the country’s investments abroad being leveraged to cope with a deficit budget at home, the minister was quoted as saying that while the oil decline “has clearly shown the structural issues in our economy”, having low debt, strong local and international reserves would help make reform "quite steadily" without “reacting aggressively” with steep spending cuts.
The minister made clear that despite lower oil prices, Kuwait is "spending as much as possible" to boost economic growth in the country. He reiterated that the government will not cancel any projects, despite tightening finances and instead would work to cut wasteful spending in order to plug the budget deficit, which is projected to exceed 13 percent of GDP in 2016.
He pointed out that the government is pushing through measures designed to reduce subsidies on utilities, introduce corporate taxes, merge state entities and tap local and international debt markets in order to tide over the income crunch and prevailing tighter economic conditions following a fall in oil revenue.