The frequent standoffs between the cabinet and parliament have meant that many potentially useful economic reforms and major projects have not moved forward, as the government has been unable to secure approval from MPs for its plans.
The underlying dynamic of pressure from members of parliament and their constituents to have greater
influence over the detail of government policy is, in part, fuelled by a view that the ruling Al-Sabah family and its allies are gaining disproportionately from Kuwait’s oil and gas riches. While the tensions between the executive and the parliament have made it harder for the government to move ahead with a reforming policy agenda, there is only limited appetite for major constitutional change in the country.
Until recently, government revenues easily outpaced expenditure in most years, allowing the government to accumulate substantial savings. However, the gap narrowed notably in 2016 when it measured just 0.3 per cent of GDP. In the years before then, the gap was often around 30 per cent or more of GDP.
The situation improved somewhat in the following three years, but the Covid-19 crisis led to a further reversal, with government net borrowing reaching 8.3 per cent of GDP that year. The situation is expected to stabilise in the coming years, according to IMF projections. IMF further stated that, after contracting by 8.1 per cent in 2020, the Kuwait’s GDP is estimated to have grown by 0.9 per cent in 2021 and is projected to grow by 4.3 per cent in 2022.