Finance minister of the Year, Middle East
Anas Al-Saleh, Kuwait
Relative to many of its oil-producing peers, Kuwait is weathering the lower commodity price environment well. Backed by strong fiscal and external positions, as well as a break-even oil price of about $46 per barrel, the country is expected to register gross domestic product (GDP) growth of 2.5% in 2016. Improvements to the investment environment, coupled with the government’s strong commitment to capital spending, have gone some way to supporting this growth.
“[Kuwait] is fortunate enough to be in a position of great financial and economic strength, thanks to a combination of high oil reserves and low oil production costs. As a result, our break-even point for both fiscal and external balances is the lowest among Gulf Co-operation Council [GCC] countries. In parallel, Kuwait boasts a very robust balance sheet with one of the lowest debt-to-GDP ratios in the GCC, and large domestic and international assets,” says Kuwait’s finance minister, Anas Al-Saleh.
But serious longer term challenges remain. A heavy dependence on oil-related revenues will hit the country’s finances much harder in the coming years, as generous subsidies and an inflated public sector wage bill dampen its economic outlook. In response to these challenges, Mr. Al-Saleh has enacted an ambitious programs of reform in partnership with other government agencies. This includes the repricing of public goods and services and the introduction of value-added tax.
“The reform plan, comprising more than 40 initiatives over the short and medium term, materializes the government’s strong will to balance public finances as well as diversify the economy. Such diversification will focus on increasing national and foreign private sectors’ contribution to the economy, through the development of public-private partnerships projects, fostering small and medium-sized enterprises, initiating a nationwide privatization strategy, as well as increasing the ease of doing business in our country,” says Mr. Al-Saleh.
Further steps to rein in government spending include improving government efficiency, rationalizing subsidies and reforming the public sector wage system. Taken together, this represents one of the boldest reform programs in the GCC. Though the full implementation of these changes will depend to some degree on the country’s political environment, they nevertheless represent the kind of long-term vision that is required during a deeply challenging time for oil producers across the globe.