COVID19 Pandemic: Kuwait talks about ‘rationalized’ govt. spending amid crisis
An unprecedented event like the COVID19 crisis can severely challenge existing templates of business and economy. Companies are searching for newer ways to look at continuity. The aviation industry has to evolve to survive. The hospitality industry is staring at severe disruption for months. Offices have embraced work for home. Real estate, depending on these office spaces, might not look the same.
In this pandemic, one of the worst sector which has been hit by the crisis is the oil sector. Gulf economies which heavily rely on oil business will have to look at alternatives to cushion themselves against any shocks.
One Gulf economy, which is already relooking at the growth and investment strategy, is Kuwait.
In a televised address by the Emir of Kuwait, Sheikh Sabah Al Ahmed Al Sabah yesterday sought the support of political parties to look at government expenditure and rationalize the way money is spent. More importantly, he also asked then parties to explore ways to look single commodity – dependence and build a “stable and sustainable” economy.
On 8 May, Kuwait imposed a stringent 24-hours lockdown for 20 days, as the country reported a spike in corona cases. According to the latest report, the city yesterday reported 589 COVID19 positive cases, taking the total to 9,286.
According to a Bloomberg report, the emir added that the pandemic had rocked the world, and “we are part of it.” For Kuwait, like many other Gulf countries, declining oil prices, and a complete halt in other economic activities have caused a significant strain on the health of the economy.
However, it remains unclear if the statement was general on the state of the economy, or it meant that the government might delay payment of its due.
According to a report, Moody’s Investor Service is reviewing Kuwait’s AA2 rating. Declining oil prices have caused a significant impact on the government’s revenue. For Kuwait, about 40 percent of its GDP and 92 percent of its export revenue is linked to the oil and gas sector. Demand for oil is likely to pick up only when countries restart businesses and industries. While many countries are lifting the lockdown, it might take a while for sectors to pick up production in full scale.