Omar Hasan • AFP
Wednesday 7 January 2004
Last Update 7 January 2004 12:00 am
KUWAIT CITY, 7 January 2004 — Kuwait, breathing a sigh of relief at the ouster of arch-foe Saddam Hussein and banking on highly optimistic financial forecasts, appears set on the right track for a major economic boom, economists said yesterday.
The Gulf Arab state has taken a number of economic decisions, long delayed over security concerns, and kickstarted a major drive to lure foreign investors into the emirate.
Political reforms were triggered after the July general elections and for the first time the posts of crown prince and prime minister were split.
Sheikh Sabah Al-Ahmad Al-Sabah, who served as foreign minister for four decades, was appointed the new premier and formed a “reformist Cabinet.”
“There is definitely more confidence now in the more stable political authority. This has boosted investor trust in the economy,” said Amer Al-Tameemi, head of Kuwait Economic Society.
“Ministers assigned the economic portfolios, especially commerce and industry, finance and planning, are enthusiastic for reforms,” Tameemi told AFP.
Since July, the new Cabinet has enforced the foreign direct investment law, asked parliament to speed up passage of a new income tax bill, and opened up the domestic aviation sector to competition.
Commerce and Industry Minister Abdullah Al-Taweel last month launched a major campaign to lure foreign capital by saying security concerns must take the back seat after Saddam’s fall. “Security concerns were predominant when Saddam Hussein was in power. After the liberation of Iraq, opening the economy has become the dominant concern,” Taweel said. The ultimate objective of the campaign is to turn Kuwait into a “regional financial, commercial and services center,” for neighboring Gulf states and the Asian markets, he added.
Parliament last month passed in the first reading a bill allowing foreign banks to operate in the emirate.
OPEC member Kuwait is expecting a record surplus in the current fiscal year which ends March 31 on the back of higher oil revenues and a drop in spending.
Figures posted on the Finance Ministry website show that at the end of last November, the eighth month of Kuwait’s 2003/2004 fiscal year, the emirate had already accumulated a 1.965 billion dinars ($6.55 billion) surplus.
The emirate registered 4.54 billion dinars ($15.13 billion) in oil revenues, which contribute about 90 percent of total income.
The Kuwait Stock Exchange (KSE) index soared above the 5,000-point psychological barrier for the first time ever at the close of trading yesterday, to end on 5,002.80 points, up 1.3 percent on Monday’s closing.
The KSE, which has rallied since the ouster of Saddam’s regime in neighboring Iraq last April, ended 2003 up a staggering 101.7 percent.
The emirate has virtually no foreign debt and its domestic borrowing is well checked under $9 billion.