{
  "title": "IMF Executive Board Concludes 2024 Article IV Consultation with Kuwait",
  "publication": "IMF News, December 9, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/12/06/pr24452-kuwait-imf-executive-board-concludes-2024-article-iv-consult",
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  "summary": "Washington, DC – December 9, 2024: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Kuwait.",
  "publishDate": "2024-12-09",
  "sections": [
    {
      "heading": "Recent economic developments",
      "content": "- Real GDP contracted by 3.6 percent in 2023.\n- Oil sector real GDP contracted by 4.3 percent in 2023, driven by an OPEC+ production cut.\n- Non-oil sector real GDP contracted by 1.0 percent in 2023, primarily reflecting lower manufacturing activity.\n- Real GDP contracted by 1.5 percent (y-o-y) in 2024Q2.\n  - Oil sector contracted by 6.8 percent in 2024Q2.\n  - Non-oil sector rebounded by 4.2 percent in 2024Q2.\n- Headline CPI inflation:\n  - Declined to 3.6 percent in 2023 (reflecting lower core and food inflation).\n  - Moderated to 2.6 percent (y-o-y) in September 2024."
    },
    {
      "heading": "External position and financial sector",
      "content": "- Current account surplus moderated to 31.4 percent of GDP in 2023.\n- Official reserve assets: US$47.6 billion at end-2023, equivalent to 9.2 months of projected imports.\n- Fiscal balance of the budgetary central government swung to a deficit of 3.1 percent of GDP in FY2023/24.\n- Fiscal balance of the general government—including estimated SWF investment income and SOE profit transfers—was 26.1 percent of GDP in FY2023/24.\n- Credit growth slowed in 2023 given higher interest rates.\n- Banks maintained strong capital and liquidity buffers; NPLs remained low and well provisioned."
    },
    {
      "heading": "Baseline projections (headline)",
      "content": "- Real GDP: contract by a further 2.8 percent in 2024, then expand by 2.6 percent in 2025.\n- Non-oil GDP: expand by 2.0 percent in 2024 despite fiscal consolidation (text); Table shows Non-oil 1/ at 2.1 for 2024 and 2.3 for 2025.\n- Headline CPI inflation to moderate to 3.0 percent in 2024.\n- Current account surplus to moderate to 27.2 percent of GDP in 2024.\n- Fiscal deficit of the budgetary central government to increase to 6.6 percent of GDP in FY2024/25."
    },
    {
      "heading": "Risks to the outlook",
      "content": "- Risks skewed to the downside.\n- External risks: commodity price volatility, a global growth slowdown or acceleration, and the intensification of regional conflicts.\n- Domestic risks: implementation delays or accelerations of fiscal and structural reforms.\n- Policy implication: reforms are needed to diversify the economy away from oil to enhance resilience and promote private investment."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Directors welcomed:\n  - Emergence of recovery in the non-oil sector.\n  - Moderating inflation.\n  - Significant financial buffers.\n- Directors emphasized:\n  - Need for sustained diversification efforts given heavy reliance on oil.\n  - Importance of a comprehensive and well-sequenced package of fiscal and structural reforms.\n- Fiscal policy guidance:\n  - Undertake fiscal consolidation over the medium-term to enhance fiscal sustainability and intergenerational equity.\n  - Balanced approach underpinned by current expenditure rationalization and non-oil revenue mobilization, while increasing infrastructure investment.\n  - Extend the CIT to all large domestic companies.\n  - Adopt the GCC-wide VAT and excise taxes.\n  - Contain the wage bill and phase out energy and water subsidies, while protecting vulnerable groups.\n  - Implement a Medium-Term Fiscal Framework to strengthen budget planning and execution.\n  - Enact the Financing and Liquidity Law to facilitate orderly fiscal financing.\n- Monetary and financial sector guidance:\n  - Exchange rate peg remains an effective nominal anchor.\n  - Maintain restrictive monetary policy stance as appropriate.\n  - Strengthen monetary transmission by deepening the interbank and domestic sovereign debt markets.\n  - Replace the unlimited guarantee on bank deposits with a limited deposit insurance framework to mitigate moral hazard.\n  - Phase out bank lending rate caps to support efficient risk pricing.\n- Structural and governance guidance:\n  - Prioritize comprehensive, well-sequenced reforms to improve competitiveness and diversify the economy.\n  - Improve the business environment, enhance transparency, and further open the economy.\n  - Implement gradual labor market reforms to incentivize private sector-led growth.\n  - Address measures to improve the AML/CFT framework identified by the 2024 FATF Mutual Evaluation.\n  - Advance climate change adaptation and mitigation efforts.\n  - Address shortcomings in data provision, supported by Fund capacity development."
    },
    {
      "heading": "Key quantitative indicators (selected table highlights)",
      "content": "- Output and prices (Percent change)\n  - Real GDP: 5.9 (2022); -3.6 (2023); -2.8 (2024); 2.6 (2025); 2.2 (2026)\n  - Oil 1/: 12.1 (2022); -4.3 (2023); -6.9 (2024); 3.0 (2025); 2.0 (2026)\n  - Non-oil 1/: -0.3 (2022); -1.0 (2023); 2.1 (2024); 2.3 (2025)\n  - CPI inflation (average): 4.0 (2022); 3.6 (2023); 2.4 (2024)\n  - Core 2/: 3.3 (2022); 3.1 (2023); 2.5 (2024)\n- External sector (Percent of GDP, unless noted otherwise)\n  - Current account balance: 34.3 (2022); 31.4 (2023); 27.2 (2024); 22.5 (2025); 19.8 (2026)\n  - Official reserve assets (months of imports): 9.1 (2022); 9.2 (2023); 9.3 (2024); 9.4 (2025); 9.5 (2026)\n  - Gross external debt: 35.0 (2022); 39.4 (2023); 39.5 (2024); 41.7 (2025); 42.3 (2026)\n- Government finance (Percent of GDP)\n  - Revenue 4/: 69.8 (2022); 78.6 (2023); 75.4 (2024); 74.0 (2025); 73.2 (2026)\n    - Oil: 65.5 (2022); 73.7 (2023); 70.2 (2024); 68.5 (2025); 67.3 (2026)\n    - Other 4/: 4.3 (2022); 4.9 (2023); 5.2 (2024); 5.5 (2025)\n  - Expenditure: 48.7 (2022); 50.7 (2023); 50.2 (2024); 49.7 (2025)\n  - Net lending (+) / borrowing (-) 4/: 30.4 (2022); 29.9 (2023); 24.7 (2024); 23.8 (2025); 23.4 (2026)\n  - Budgetary central government: 7.2 (2022); 0.9 (2023); -5.8 (2024); -7.9 (2025); -8.8 (2026)\n  - Gross government debt 5/: 2.9 (2022); 3.2 (2023); 7.3 (2024); 12.9 (2025); 16.3 (2026)\n- Money and credit\n  - Credit to nonfinancial private sector: 8.6 (2022); 1.8 (2023); 3.9 (2024); 4.7 (2025); 5.1 (2026)\n  - Broad money: M2: 6.5 (2022); 1.0 (2023); 2.7 (2024); 4.6 (2025)\n- Memorandum items\n  - Nominal GDP (US$ billions): 184.0 (2022); 163.7 (2023); 159.1 (2024); 158.6 (2025); 162.2 (2026)\n  - Population (millions): 4.8 (2022); 5.0 (2023)\n  - GDP per capita (US$): 38,380 (2022); 33,321 (2023); 31,753 (2024); 31,029 (2025); 31,104 (2026)\n\nSource: Press Release No. 24/452 — IMF Executive Board Concludes 2024 Article IV Consultation with Kuwait (December 9, 2024).\n\n---\n\n\n References\n\n- Kuwait and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/12/06/pr24452-kuwait-imf-executive-board-concludes-2024-article-iv-consult"
    }
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    "Published: December 9, 2024",
    "Real GDP contracted by 3.6 percent in 2023.",
    "Oil sector real GDP contracted by 4.3 percent in 2023, driven by an OPEC+ production cut.",
    "Non-oil sector real GDP contracted by 1.0 percent in 2023, primarily reflecting lower manufacturing activity.",
    "Real GDP contracted by 1.5 percent (y-o-y) in 2024Q2.",
    "Headline CPI inflation:",
    "Current account surplus moderated to 31.4 percent of GDP in 2023.",
    "Official reserve assets: US$47.6 billion at end-2023, equivalent to 9.2 months of projected imports.",
    "Fiscal balance of the budgetary central government swung to a deficit of 3.1 percent of GDP in FY2023/24.",
    "Fiscal balance of the general government—including estimated SWF investment income and SOE profit transfers—was 26.1 percent of GDP in FY2023/24.",
    "Credit growth slowed in 2023 given higher interest rates.",
    "Banks maintained strong capital and liquidity buffers; NPLs remained low and well provisioned.",
    "Real GDP: contract by a further 2.8 percent in 2024, then expand by 2.6 percent in 2025.",
    "Non-oil GDP: expand by 2.0 percent in 2024 despite fiscal consolidation (text); Table shows Non-oil 1/ at 2.1 for 2024 and 2.3 for 2025.",
    "Headline CPI inflation to moderate to 3.0 percent in 2024.",
    "Current account surplus to moderate to 27.2 percent of GDP in 2024.",
    "Fiscal deficit of the budgetary central government to increase to 6.6 percent of GDP in FY2024/25.",
    "Risks skewed to the downside.",
    "External risks: commodity price volatility, a global growth slowdown or acceleration, and the intensification of regional conflicts.",
    "Domestic risks: implementation delays or accelerations of fiscal and structural reforms.",
    "Policy implication: reforms are needed to diversify the economy away from oil to enhance resilience and promote private investment.",
    "Directors welcomed:",
    "Directors emphasized:",
    "Fiscal policy guidance:",
    "Monetary and financial sector guidance:",
    "Structural and governance guidance:",
    "Output and prices (Percent change)",
    "External sector (Percent of GDP, unless noted otherwise)",
    "Government finance (Percent of GDP)",
    "Money and credit",
    "Memorandum items",
    "[Kuwait and the IMF](http://www.imf.org/external/country/KWT/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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