Kuwait: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Kuwait

IMF Staff Country Reports, March 28, 2022

Source details

Canonical URL: Kuwait: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Kuwait

Sustained political gridlock has hobbled reforms and increased macroeconomic vulnerabilities, but a new high-level effort offers hope for resolving the impasse.
Authorities have been preparing a comprehensive reform plan which, if adopted by parliament, would pave the way to address the structural and fiscal imbalances in the economy and promote sustainable and inclusive growth.
Authorities responded swiftly and decisively to the COVID-19 crisis with social distancing restrictions and fiscal, monetary, and financial policy support measures.
In 2021, a high rate of vaccination was achieved, although there has been a major surge in infections with the recent arrival of the Omicron variant.
A nascent economic recovery is underway, supported by higher oil prices and some relaxation of mobility restrictions.
Substantial uncertainties to the economic outlook underscore the importance of phasing out COVID-19 relief measures at a measured pace as the economy recovers, and of accelerating the reform momentum to limit risks and rebuild buffers.
Banks entered the crisis from a position of strength and have remained well capitalized and highly liquid.

Political gridlock has delayed reforms and increased macroeconomic vulnerabilities.
A comprehensive reform plan is being prepared by the authorities; parliamentary adoption is pivotal for addressing structural and fiscal imbalances and for promoting sustainable and inclusive growth.
COVID-19 policy response combined public health measures (social distancing) with fiscal, monetary, and financial support.
High vaccination rates in 2021 were followed by a major surge in infections after the arrival of the Omicron variant.
Economic recovery is nascent and supported by higher oil prices and relaxed mobility restrictions, but faces substantial uncertainties.
Banking sector resilience: banks entered the crisis well capitalized and highly liquid and have remained so through the crisis.

Phase out COVID-19 relief measures at a measured pace as the economy recovers to avoid premature withdrawal or prolonged fiscal strain.
Accelerate reform momentum to limit risks and rebuild buffers; adoption of the comprehensive reform plan by parliament is essential.
Continue monitoring macroeconomic outlook given substantial uncertainties and the evolving pandemic situation.