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Privatisation of ministries to enhance efficiency
February 9, 2019, 5:01 pm

In a bid to improve efficiency and reduce the budget deficit Kuwait government is seriously contemplating privatising services of some government entities.

On top of the list is the postal and telecom sectors which have been waiting for long overdue reform in order to get ahead in an increasingly digitised world as the government is working to keep pace with a growing tech-savvy population that is characterised by high penetration rates.

Privatisation will mean a shrinking of the state’s organisational structure, resolving deficit problems and reducing expenditure, while improving efficiency.

In keeping with Kuwait’s 2035 strategy, the government has already made great strides in its digital economy as Kuwait was among the biggest risers in a recent Global Technology Report. Regulatory reforms are being put in place to usher in an era where tech companies help speed up evolution into a diversified knowledge-based economy.

Privatisation will be part of the ambitious economic strategy that aims to deliver on past promises and new goals. The New Kuwait’s strategy’s seven pillars are public administration, economy, infrastructure, living environment, health care, human capital and global position.

Each pillar has associated objectives and collectively the aim is to reduce red tape, broaden the economy beyond the reliance on oil revenues, improve infrastructure and build more homes for citizens, invest in developing skilled Kuwaiti health workers, as well as improved medical facilities, reform schools to give their children the skills to thrive in competitive private sector roles and enhance Kuwait’s position as a regional leader in culture, diplomacy, trade and philanthrophy.

However, the International Monetary Fund recently urged Kuwait to implement further economic reforms which include reducing the public wage bill (approx 19 percent of GDP) to encourage nationals to seek opportunities in the private sector, thereby enhancing its productivity and competitiveness.

IMF has been urging Kuwait to gradually phase out fuel, electricity, and water subsidies as they encourage excessive consumption and widen the budget deficit.

To achieve the government’s stated intentions to transition its role in the economy from an operator to regulator, from wealth distribution to wealth creation, and to entrust the economy to the private sector, the government has identified four private sector enablers which are privatisation programmes, public private partnership initiatives, enhancing the role of small and medium-sized enterprises and promotion of foreign and local direct investments.

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