A government report said a number of major local factors have contributed to the rise in the inflation rate in the State of Kuwait to about 4% during 2022, including reliance on imports of goods and services by 90% and the increase in purchasing power due to the financial distributions approved by the government, including buying the earned leave of government employees and others, in addition to the shortage of professional workers.
The report issued by the Economic Development Department of the General Secretariat of the Supreme Council for Planning and Development indicated that the main groups that witnessed the highest inflation rates during the past year were education 12.1%, food and beverages 7.4%, clothing and apparel 5.6% and transportation 4%, reports Al-Qabas daily.
The report pointed out that there are a number of economic and commercial decisions and monetary policies taken by the government that have played a pivotal role in reducing the rise in inflation, saying the importance of diversifying sources of income and the necessity of maximizing non-oil revenues while ensuring self-sufficiency for the entire population at all times, regardless of what the future holds such as the global unrest and fluctuations in global oil markets.
It is also necessary to make optimal use of the rise in oil prices and make proper use of them through investment projects that will bring huge non-oil revenues to the state, and to encourage thinkers and creators and embrace them so that their skills are inside Kuwait and not outside it.
The report added, it is time for the private sector to play a major role in achieving good added value for the state, and the importance of encouraging it and opening it to new investors, reducing the documentary cycle, and overcoming obstacles to foreign investment in a way that serves the state optimally, and staying away from favoritism at the expense of the state and the citizen.
Regarding future oil price scenarios and their impact on inflation rates in the State of Kuwait for the years 2023 to 2026, the report indicated the most optimistic expectations assuming global crude oil prices at $80 per barrel and continuing to rise in the medium term by about $10 annually with inflation growth rates during the years 2023-2026 by about 2.6% to 3.2%.
In the medium term, the estimates of all scenarios indicate a slowdown in the growth rate of inflation during the coming years.
The reason for this is due to estimates that the Central Bank of Kuwait will continue to raise interest rates gradually during the coming years, in addition to the measures taken by the government to reduce inflation in the future through a strategic plan; serious about strengthening the food, medicine and water security system for all residents.
The study concluded that it is necessary to work hard to take firm reform steps to diversify sources of income in all sectors and move away from dependence on oil as the sole source of income, in order to achieve self-sufficiency for the entire population.
It stressed the importance of activating the policies of the development plan and implementing them through a package of development initiatives in cooperation with the public sector, the private sector and civil society.
The most important supporting policies are:
1 – Housing services
— Finding sustainable alternatives to the current housing system, to ensure everyone’s access to housing.
— Increasing the number of health cities
— Improving the capabilities of health professional staff.
— Health literacy.
3 – Food, beverages, clothing, restaurants and hotels
— Developing large-scale, highly efficient production economies.
— Improving the ease of doing business to establish, operate and expand companies.
-Supporting and promoting foreign direct investment by facilitating entry into the national economy.
— Developing innovative products and services by developing an integrated environment for technology, innovation and knowledge.
— Increasing the impact of projects and small and medium-sized companies through financing, sponsoring and expanding their scope.
— Aligning the outcomes of the educational system with the needs of the labor market to provide students with the required skills.
— Improving the national education system, including the curriculum, teachers’ skills, and teaching methods.
— Encouraging learning science, technology, engineering and mathematics to lead towards a knowledge economy and establishing academic partnerships with prestigious international institutions.
— Improving the efficiency of land, air and port transport infrastructure, strengthening current transport systems using smart technologies and facilitating import and export procedures.
6 – Entertainment and culture
– Developing cultural and historical sites, enabling access to them and managing them sustainably.
— Increasing the attractiveness of Kuwaiti arts and culture to enhance media production.
— Increase hosting and participation in international events and conferences.
7 – Cigarettes and tobacco
— Implementing a tax system on selective goods and value added tax.
— Improving the general health of young people by combating drugs, reducing accidents on roads and supporting sports.
8 – Communications
— Digital transformation of government operations and services.
— Expanding the role of the private sector in providing government services.
— Developing the information and communications infrastructure to transform into a knowledge-based digital economy.