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THE BENEFITS OF BETTER REGULATORY INFRASTRUCTURE FOR KUWAIT
Kuwait’s economy is at a crossroads. Persistently low oil prices and other socio-economic factors highlight the need to create the right environment for the private sector in order to increase economic growth. Several studies indicate that Kuwait has been underperforming in this regard, one of the key drivers being its lack of a strong regulatory infrastructure. The need for regulatory reform has been made even more urgent because of Kuwait’s current push towards privatization. In several areas Kuwait has already taken first steps in setting up the regulatory infrastructure to serve its purposes.

These initiatives; however, have been developed independently and without addressing the systemic underpinning infrastructure. We believe that Kuwait’s regulatory institutions, as well as the manner in which regulations are created and adherence to them is supervised and enforced need immediate reform. Failure to do so will result in risking the near-term sustainability of Kuwait’s public finances and the weakening of its GDP growth. In this report, we set out a framework, built on publicly available global indicators and best practices that plot Kuwait’s regulatory performance relative to other countries across five design principles. Based on the results of this analysis, our proposed action plan for the required reforms starts by establishing a joint body with the responsibility and accountability for leading the required change.


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BUDGET RATIONALIZATION IN THE TIME OF A SHIFTING OIL PARADIGM IMPLICATIONS FOR GOVERNMENT EXPENDITURE IN KUWAIT
With oil prices currently hovering in the range of $40–45 per barrel, many oil-rich nations are facing significant revenue shortages, while expenditures have been trending strongly upwards. Energy markets have reached a turning point, and analysts expect low oil prices to be the norm in the short- to medium-term. Because new revenue streams such as taxes require many years to be developed, governments will need to focus on an underutilized tool in the short- to mid-term: strategic budget rationalization.

This paper focuses primarily on budget rationalization in expenditures, and particularly on wages and subsidies because of their large size and worrisome growth trajectories. Special emphasis is also placed on complementary wealth distribution policies that can make reforms politically possible. The paper explores the impact of the change in energy dynamics and the urgent need for action in Kuwait and the wider region. It then identifies relevant rationalization initiatives in the state of Kuwait. Finally, it outlines the importance of fiscal reforms for Kuwait’s larger ambitions to become a diversified knowledge economy.


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KUWAIT’S $10 BN OPPORTUNITY IN FINANCIAL SERVICES
In the second half of the 20th century, Kuwait’s financial sector was regularly regarded as being at the forefront of the GCC. Multiple factors, however, including global and regional developments and increased competition, have resulted in an erosion of Kuwait’s financial sector’s positioning compared with other GCC centres.

In this report we present a pulse check on Kuwait’s financial services (FS) sector based on TICG research and interviews conducted with board members, CEOs, and other C-level executives from leading financial institutions in Kuwait. The dominant conviction that emerges is this: Instead of categorizing Kuwait as another regional or international financial center, it would be more beneficial to evolve the FS sector so that it works better for the real Kuwaiti economy.