Economic reform is on the horizon following months of political standoff
Political deadlock has delayed the approval of a 2022/2023 state budget, the implementation of economic reforms, as well as amendments to the country’s debt law. The budget, which has to be approved before November, has set spending at KWD 23.65 billion (US$ 77.2 billion). As such, political uncertainty in 2023 is not yet fully eliminated until a cabinet is formed and government and parliament are able to break the existing gridlock. B2B demand growth may accelerate in 2023 if tensions are eased and Kuwait is able to tap into heightened oil revenues.
Overview
Kuwaiti citizens have elected a New National Assembly following months of political standoff between parliament and the government. Opposition candidates won 28 out of 50 seats, gaining the parliamentary majority after long-standing opposition figures ended a decade-long election boycott. Voter turnout reached nearly 50%, as Crown Prince Sheikh Mishaal al-Ahmed al-Sabah vowed that the government would not interfere in parliamentary proceedings amid new policies that aimed to reduce voter manipulation. Subsequently, the crown prince accepted the government’s resignation on Sunday, with the outgoing government operating in a caretaker capacity until a new cabinet is formed.
Our View
Kuwait’s political outlook may improve after years of political stalemate between parliament and government. A series of recent changes in major government entities, including the removal of top officials from the Public Institution for Social Security, signifies a willingness to move toward economic and political development. The next few weeks will be crucial in determining Kuwait’s economic trajectory, as a new government must be formed within two weeks of an election.
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