Statement by IMF Deputy Managing Director Min Zhu at the Conclusion of his Visit to KuwaitPress Release No. 14/191
May 1, 2014
Mr. Min Zhu, Deputy Managing Director of the International Monetary Fund (IMF), visited Kuwait April 30-May 1 to meet with the Kuwaiti authorities and to participate in a high-level conference on “Economic Development, Diversification, and the Role of the State,” co-hosted by the IMF and Kuwait’s Ministry of Finance.
During his visit, Mr. Zhu met with Mr. Anas Al-Saleh, Minister of Finance and Mr. Mohammed Al-Hashel, Governor of the Central Bank of Kuwait.
Mr. Zhu issued the following statement in Kuwait at the conclusion of his visit:
“It has been a great pleasure to discuss Kuwait’s economic prospects with Minister Al-Saleh and Governor Al-Hashel. Kuwait’s macroeconomic performance is strong. Non-oil GDP growth is expected to accelerate from 2.7 percent in 2013 to 3.9 percent in 2014. The fiscal surplus is expected to remain high at 29 percent of GDP. The banking system remains sound and resilient to shocks. However, structural reforms to improve the business environment, governance, and institutional and policy making frameworks are required to make progress on economic diversification. Moreover, creating incentives for employment of nationals in the private non-oil sectors would entail containing growth in public sector wages and jobs.
“The conference provided a good opportunity to interact with international experts, high-level policymakers from the region and renowned academics about their views on global economic diversification strategies and how they can help to reduce reliance on oil and provide increased employment opportunities for nationals in the GCC. The GCC countries remain susceptible to fluctuations in oil production and price movements in the international oil market. They need greater economic diversification to help boost productivity and living standards, create jobs, and reduce the fiscal and external risks associated with the heavy reliance on oil revenues.
“The conference shed light on successful diversification strategies, drawing on the experiences of countries in the region and other parts of the world, including other commodity exporters. By bringing together policymakers from the region and experts on diversification from all over the world, this conference made a positive contribution to advance our understanding of what needs to be done to encourage more diversification in the region.
“In the discussions, the conference participants emphasized the importance of developing a non-oil tradable sector to achieve sustainable growth. This is not an easy task, but participants emphasized the importance of a strong and competitive business environment and ensuring that incentives in the economy encourage people to work in the private sector and firms to seek new export opportunities. Improving the quality of education and encouraging entrepreneurship are important elements of this strategy. In some country cases, successful diversification strategies have included a policy mix of promoting vertical diversification in downstream hydrocarbon industries and horizontal diversification with an emphasis on technological upgrade. These strategies, however, need to be managed in an open and competitive way, with a focus on competition in international markets, if they are to be successful.
“I also had the pleasure of visiting the IMF Middle East Center for Economics and Finance (CEF) in Kuwait City, a premier training center in the region. The center has trained over 3000 government officials from 22 Arab countries since May 2011and has been able to increase sharply the training of officials from Kuwait and other Arab League countries. This training is helping to build capacity for economic decision-making and policy implementation. I conveyed our appreciation to the Kuwaiti authorities for their generous support of the CEF and the Fund’s technical assistance initiatives in the region.
I was pleased to meet with participants of the training on “Islamic Banking Regulation and Supervision,” organized jointly by the Middle East Regional Technical Assistance Center (METAC) and the CEF. This training is part of a global effort by the IMF to respond to its membership’s needs in developing their Islamic Financial systems. The IMF is scaling up its work on Islamic Finance with the objectives of enhancing its understanding of the topic, providing a platform for internal coordination and information sharing, and liaising and sharing information with global and regional institutions involved in Islamic Finance.
“I would like to express my appreciation to the Kuwaiti authorities for their hospitality and for co-hosting this conference with the IMF and contributing to the high quality of discussions.”