Kuwait has approved $65 billion in infrastructure, health, environmental, and power projects for the fiscal years 2021-2022, with 5 percent of them based on private-sector partnerships.
The projects include 14 major public projects mainly the airport expansion, the Silk City, island development, trans-Kuwait rail network and rail link with nearby Gulf countries, Matla City, and the Clean Fuel Project with a total value of approximately $59 billion and four partnership projects worth nearly $3.2 billion.
Kuwait is currently plagued with huge debt and political gridlock, limiting the country’s capacity to invest money from its sovereign fund and, as a result, limiting the country’s potential to diversify its economy away from oil.
The country’s budget deficit has increased to about 29 percent of GDP, making it one of the largest globally. While non-oil GDP is progressively rebounding, it is unlikely to reach pre-pandemic levels until 2022, the sector is forecast to contribute to the majority of Kuwait’s expected 2.5 percent GDP growth this year, according to the Oxford Economic Insight research commissioned by the Institute of Chartered Accountants in England and Wales (ICAEW).
Earlier this year, Kuwait aimed to carry out projects with a value of around $6 billion in its current 2021-2022 development plan. The plan, which started on April 1, included 9 development programs which comprised 132 projects undertaken by 43 government institutions.
Kuwait had approved a $76 billion state budget in June, with a focus on creating jobs as the OPEC member works to diversify its economy away from oil, as do other Gulf countries. Kuwait’s Finance Minister, Mr. Khalifa Hamade, indicated that 71.6 percent of spending will be directed towards employment creation, with 15 percent going towards development projects like infrastructure and housing projects.
Kuwait plans to increase expenditure to recover and improve the economy after S&P downgraded the country’s credit rating for the second time in two years. To help increase spending on health care and education, $630 million has been put towards worker’s compensation.
Related: S&P cuts Kuwait’s credit rating to A+ from AA- on lack of deficit-financing strategy