|Modern buildings reflect a wealthy
country with one of the highest GDP
per capita figures in the world.
Kuwait has always been one of the most dynamic
and pioneering countries in its region.
Situated at the northern end of the Arabian
Gulf, it has been a center of trade and
commerce for centuries.
emirate boasts one of the Gulfs most
open and progressive societies, and has
been making significant strides towards
greater democratization. The oil-fueled
economy is booming, budget surpluses have
filled state coffers, and a new sense of
optimism has unleashed a wave of investment
and major development projects.
For more than
a decade after the 1990 invasion by Saddam
Husseins Iraqi forces, Kuwait feared
that history could repeat itself. However,
with the Iraqi dictators permanent
removal from the scene, the focus is shifting
away from security and toward the future.
High price of
oil could boost this year’s budget
surplus to $20 billion
has increased and the government has been
encouraged to press ahead with far-reaching
economic and political reforms under the
leadership of Prime Minister Sheikh Sabah
Al-Ahmad Al-Jaber Al-Sabah.
oil prices, low interest rates, and even
lower inflation have powered economic growth.
Real gross domestic product (GDP) increased
by 4.6% in 2004, and has been forecast to
rise by more than 6.5% in 2005. Kuwaits
leading banks have been ringing up record
profits and the Kuwait Stock Exchange has
of the economy has been reaffirmed by international
ratings agencies; Fitch has given Kuwait
a AA country ceiling rating, placing the
emirate on a par with countries such as
India, Hong Kong, and Taiwan.
has rebuilt its foreign assets since its
liberation by U.S.-led forces in1991 to
a level estimated at close to twice its
in 2004/2005 was three times higher than
expected, reaching $27.8 billion and accounting
for 91% of total revenues. Kuwait posted
a budget surplus of $11 billion, with actual
revenues reaching a record $30.5 billion.
budget is based on a cautiously forecast
oil price of $21 per barrel. Since the start
of the current fiscal year, however, the
price of Kuwait export crude has been averaging
more than double that estimate, at around
$44 per barrel. With the outlook for international
oil prices remaining strong, independent
analysts are predicting that Kuwait could
post a surplus for 2005/2006
of more than $20 billion.
years of budget windfalls have reduced the
need for precautionary saving and are allowing
the government to invest tens of billions
of dollars in a variety of mega projects.
has been rising sharply, and the 2005/2006
budget proposes an 11% increase in expenditure
compared to 2004/2005.
In the past
two fiscal years, spending on infrastructure
has jumped from 14% of Kuwait's budget to
23%. Oil, petrochemicals, power, and water
projects are planned or already under way,
and there are a host of schemes to develop
the countrys transport infrastructure
of ports, roads, and the airport.
projects planned by the private sector are
valued at $8 billion and include entertainment
complexes, hotels, and shopping malls, housing
units, and commercial office space.
has risen significantly as opportunities
have opened up both in Iraq and other neighboring
countries. Minister of Foreign Affairs Sheikh
Mohamad Al-Salem Al-Sabah says the emirate
is positioning itself as a financial, commercial
and transport hub for the region and emphasizes
its advantages as an investment destination.
|The oil industry accounts for almost
half of Kuwait’s GDP and 95% of export
has a critical geographical position in
the region, which is something that many
international companies do not realize.
There are numerous opportunities for foreign
firms that establish themselves here.
is taking action not only to make the most
of the countrys oil resources, but
also to explore new sources of income and
to encourage the development of the private
sector. A number of state-run enterprises
are to be privatized.
for almost half of Kuwaits GDP and
almost all export revenue. Kuwait has proven
crude oil reserves of about 98 billion barrels
and production remains at close to full
capacity, at 2.8 million barrels per day
Aiming to raise
production to 4 million bpd by 2020, the
government is determined to press ahead
with the long delayed Project Kuwait, a
multi-billion-dollar plan that would almost
double output from the northern oil fields.The
scheme is controversial because it would
allow the participation of international
oil companies, but Prime Minister Al-Sabah
says it is of strategic
importance for the countrys economy.
At the same
time, the government recognizes the need
to diversify the economy to reduce dependence
on a soleand ultimately finitesource
of income and to generate employment in
are being made to streamline bureaucracy
and encourage the private sector to expand
non-oil sectors of the economy, such as