Kuwait could lose significant assets in its General Reserve Fund and Future Generations Fund by 2035 if the current spending rates are maintained or rise and oil continues its low price scenario over an extended period.
This stark warning comes from experts associated with the country’s 2020-2025 development plan. They stressed that further delays in addressing much needed financial and economic reforms could exacerbate the situation and speed up the process of fund depletion.
Due to the lack of economic diversification and the continued reliance on oil and allied resources as the principal source of income for the state, any downturn in oil prices has a serious impact on Kuwait’s economy. The overwhelming dependence on oil also leads to the country facing exceptional and serious challenges that could hinder its ability to fulfill its financial and international obligations.
If the financial and economic conditions continue to deteriorate at the current rate, government entities, private companies, financial institutions and the market could face severe repercussions, including high rise in unemployment, large inflation in cost of living, deterioration of services provided, and strains on social and food security.
Policy makers behind the government’s five-year plan affirmed that the state must urgently set up programs aimed at diversifying sources of income and stop wastage in public expenditures. They added that the central goal of economic reform in Kuwait is to achieve balance in the structure of the national economy, by redrawing the role of the government in economic activity.
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