IMF Executive Board Concludes 2025 Article IV Consultation with Kuwait
IMF News, February 24, 2026
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- Published: February 24, 2026
Economic developments (recent)
- Real GDP expanded by 1.7 percent (y-o-y) in 2025Q2, driven by non-oil growth of 3.1 percent (y-o-y).
- Headline inflation reached 2.4 percent (y-o-y) in November 2025.
- Current account surplus estimated at 23.6 percent of GDP in 2025.
- External buffers remain large; the financial system remains stable and prudently managed.
- Lower oil prices and production have weakened external and fiscal positions despite improvements in the fiscal position.
Outlook and projections
- Real GDP growth:
- 2026: 3.8 percent
- Medium term: growth expected to remain robust
- Non-oil growth:
- 2026 estimate: 3.0 percent of GDP
- Inflation:
- Headline CPI: 2.1 percent in 2026, stabilizing just below 2.0 percent over the medium term
- Fiscal balances:
- Fiscal deficit of the budgetary central government: 8.7 percent of GDP in FY2025/26; 9.4 percent of GDP in FY2026/27; then widening over the medium term
- External balances:
- Current account surplus: 19.6 percent of GDP in 2026; gradual decline over the medium term
- Risks: described as broadly balanced, with primary exposures to commodity price volatility, global growth changes, shifts in global financial conditions, and domestic reform speed and infrastructure project implementation
Executive Board assessment (summary)
- Recovery is underway despite lower oil prices; rebound driven by unwinding of OPEC+ production cuts and robust non-oil growth.
- Inflation moderating due to lower core and food inflation.
- Lower oil revenues have weakened external and fiscal positions; buffers remain strong.
- Financial stability maintained with a credit cycle upturn underway.
- Heavy dependence on oil implies main risks stem from oil-price and OPEC+ production developments.
- Staff welcomes Vision 2035 aspirations; stresses need for a comprehensive, well-sequenced fiscal and structural reform package to boost non-oil growth sustainably.
Fiscal policy recommendations
- Gradual fiscal consolidation at a pace of about 1 percent of GDP per year over the next decade to achieve long-term fiscal sustainability.
- Mobilize non-oil revenue:
- Extend the 15 percent CIT to all domestic companies.
- Introduce the GCC-wide excise tax.
- Introduce a 5 percent VAT.
- Rationalize public sector wage bill:
- Introduce a performance-based public sector wage setting mechanism to gradually reduce the large premium over the private sector.
- Institute a hiring cap to steadily lower the public sector employment share.
- Reform energy subsidies:
- Gradually raise retail fuel, electricity and water prices towards their GCC-average levels.
- Provide targeted cash transfers to vulnerable groups.
- Scale up on-budget public investment by around 2 percent of GDP over the medium term.
Public financial management and debt recommendations
- Implement comprehensive PFM reforms to strengthen fiscal policy conduct.
- Develop a medium-term fiscal framework, including a fiscal rules framework with:
- A ceiling on public debt.
- A target for the non-oil fiscal balance.
- Undertake periodic public investment management assessments to ensure infrastructure governance and track contingent liabilities.
- Publish a medium-term debt management strategy including a bond issuance calendar.
- Develop a sovereign asset-liability management framework to balance intergenerational fiscal policy tradeoffs and manage public sector balance sheet risks.
Monetary policy and external position
- The exchange rate peg remains an appropriate nominal anchor for monetary policy; it has supported macroeconomic and financial stability and relatively low and stable inflation.
- The external position in 2025 was substantially weaker than implied by medium-term fundamentals and desirable policies, reflecting excessive reliance on oil exports and inadequate public and private saving of oil revenue.
- Fiscal consolidation and structural reforms are needed to strengthen the external position and support the exchange rate peg.
Financial sector and macroprudential policy
- Systemic risk remains contained and prudently managed.
- With a credit cycle upturn, the CBK should consider reclassifying part of its country-specific capital buffer as a positive neutral countercyclical capital buffer.
- The forthcoming Real Estate Financing Law will permit banks to offer mortgage loans for the first time; the CBK should:
- Continue regularly reviewing the adequacy of its financial regulatory perimeter.
- Maintain its extensive macroprudential policy toolkit.
- Continue a risk-based supervisory approach to assessing banks and addressing vulnerabilities.
Structural reform priorities
- Implement a comprehensive, well-sequenced structural reform package to unify the labor market and improve the business environment.
- Priorities include:
- Reducing the public sector wage premium.
- Scaling up the supply of housing.
- Deepening financial markets.
- Note: The state owns most productive assets, employs nearly all Kuwaitis, and leads all megaprojects.
Statistics and surveillance
- Statistical capacity has weakened further from a low base, hampering surveillance.
- Major gaps in the national accounts, government finance and external sector statistics should be filled to enable well-informed policymaking.
Key selected economic indicators (2023–2027; projections)
- Output and prices (Percent change)
- Real GDP: 2023: -1.7; 2024: -2.6; 2025: 2.6; 2026: 3.8; 2027: 2.5
- Oil: 2023: -4.2; 2024: -6.9; 2025: 2.4; 2026: 4.7; 2027: 2.0
- Non-oil: 2023: 1.0; 2024: 1.8; 2025: 2.7; 2026: 3.0; 2027: (not listed)
- CPI inflation (average): 2023: 3.6; 2024: 2.9; 2025: 2.3; 2026: 2.1; 2027: (not listed)
- Core 1/: 2023: 3.1; 2024: 1.7; 2025: 1.9; 2026: (not listed)
- External sector (Percent of GDP, unless noted otherwise)
- Current account balance: 2023: 31.1; 2024: 29.1; 2025: 23.6; 2026: 19.6; 2027: 18.1
- Official reserve assets (months of imports): 2023: 9.3; 2024: 8.1; 2025: 7.0; 2026: 7.1; 2027: 7.2
- Gross external debt: 2023: 39.0; 2024: 41.3; 2025: 37.1; 2026: 43.4; 2027: 46.0
- Government finance 2/ (Percent of GDP)
- Revenue 3/: 2023: 76.6; 2024: 74.4; 2025: 77.6; 2026: 76.1; 2027: 75.4
- Oil 3/: 2023: 71.7; 2024: 68.4; 2025: 70.9; 2026: 68.9; 2027: 68.1
- (Unlabeled row) 2023: 4.8; 2024: 5.9; 2025: 6.7; 2026: 7.4; 2027: (not listed)
- Expenditure 4/: 2023: 48.3; 2024: 48.2; 2025: 50.5; 2026: 51.1; 2027: 51.0
- Net lending (+) / borrowing (-) 3/ 4/: 2023: 28.2; 2024: 26.1; 2025: 27.1; 2026: 25.0; 2027: 24.4
- Budgetary central government: 2023: 0.9; 2024: -2.4; 2025: -7.1; 2026: -9.3; 2027: -9.8
- Gross government debt: 2023: 14.7; 2024: 24.2; 2025: 28.9; 2026: (not listed)
- Money and credit
- Credit to nonfinancial private sector: 2023: 5.2; 2024: 6.8; 2025: 6.1; 2026: 5.8
- Broad money: M2: 2023: 4.3; 2024: 5.3; 2025: (not listed)
- Memorandum items
- Nominal GDP (US$ billions): 2023: 165.4; 2024: 160.2; 2025: 156.6; 2026: 159.5; 2027: 166.3
- Population (millions): 2023: 4.9; 2024: 5.0; 2025: 5.1
- GDP per capita (US$): 2023: 33,663; 2024: 31,971; 2025: 30,634; 2026: 30,593; 2027: 31,273
Source: IMF Executive Board Concludes 2025 Article IV Consultation with Kuwait (Press Release No. 26/061).