A high-ranking economic official spoke to Al-Rai daily regarding the recent downgrading of Kuwait’s sovereign rating by Moody’s by two degrees from “Aa2” to “A1”, with the change of the outlook to stable, which places Kuwait on the brink of an economic precipice, Al-Rai daily reported.
The official stressed that “the persistence of structural imbalances that the local economy suffers from, including public budget imbalances, deepens the grave negative repercussions that places pressure on economic stability,” explaining that “reducing the sovereign credit rating is a form of instability and will lead to high costs on public money, which in turn may force resorting to borrowing from foreign markets.”
And he indicated that “the classification in itself is not a problem, but reflects the strength of the structural imbalances that put pressure on the state’s budget and its economy, especially since the reduction is significant, and considering that this may not be restricted to the short term, which seems gray to all.”
He explained that “officials in the financial and economic reform file have become accustomed over the past years to rely on painkillers in addressing the challenges rooted in the general budget and the economy, instead of supporting the remedial treatments needed.”
The senior economic official said, “Let us be transparent … Kuwait is on the verge of an economic abyss, and its financial and economic crisis is ballooning, forming a real danger that threatens us all, including future generations,” indicating that “if it is difficult to determine how bad things will look in the months.”
“However, the certainty that we will not overcome the financial crisis unless we move quickly and seriously towards implementing in-depth remedial solutions, especially since economic conditions are not moving towards improvement,” he noted.
Regarding the proposed solutions, he stressed, “We are in dire need of a political will capable of managing the crisis of public budget imbalances, and making proper use of the financial capabilities of the country, and the start is by introducing the required and delayed remedies, combating corruption, and abandoning the culture of painkillers.”
He stressed that “adopting studied and correct financial reforms to enhance financial and economic stability requires that the government’s conditions do not start with the citizen’s pocket, as addressing imbalances must begin at the top of the pyramid, by reviewing the scale of expenditures in general, in addition to redirecting subsidies by placing the right person in the right position.”
The official warned that “continuing to rely on the same policies will lead to a further reduction in the sovereign credit rating, and subsequently more negative repercussions against the economic and financial conditions in the country, which puts the sustainability of society’s prosperity at risk.”
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