The International Monetary Fund said on Monday Kuwait’s non-oil growth is projected to increase to about 3.5 per cent in 2020, from 2.5 per cent last year, as higher oil prices will boost capital spending.
“The mission has assumed an average oil price of $57 per barrel in 2019–20, increasing to $60 per barrel over the medium term,” the IMF said in a statement at the end of an official staff visit to the OPEC member.
“As capital project implementation accelerates, non-oil growth is projected to increase to about 3.5 per cent in 2020.”
The IMF also said the recent OPEC decision to cut production is expected to hold oil output to 2 per cent growth in 2019, which could rebound to 2.5 per cent in 2020 given spare capacity.
The inflation rate is expected to rise in 2019–20 to about 2.5 per cent as deflationary factors seen in 2018 unwind, the Fund said.
It said higher oil revenues and investment income helped improve the overall fiscal balance in 2017/18 to an estimated surplus of 8 per cent of GDP, which will reach almost 12 per cent of GDP in fiscal year 2018/19.
Delays to the passage of a new debt law have left the government unable to issue debt since October 2017, forcing it to draw on the state General Reserve Fund for financing, including to repay maturing debt, the IMF said.
“Continued fiscal consolidation will be needed to reduce financing needs over the medium term,” the Fund added.
Last week, Kuwait announced a 2019/20 budget that included a 4.7 per cent rise in spending to KD22.5bn ($74.15bn). Salaries and subsidies accounted for 71 per cent of the budget.