– Banks’ liquidity and capitalization are good, thanks to the skilled “Central Bank”… Regulatory
The Institute of International Finance stated in a recent report that Kuwait is still the most dependent on oil in the Gulf states, expecting the Kuwaiti economy to grow by 4 percent by 2022, supported by the recovery of oil production and reforms.
The report indicated that Kuwait’s banking system enjoys good liquidity and capitalization, thanks to the skillful supervisory supervision of the Central Bank of Kuwait and strong financial buffers.
He added that the financial balance, with the exception of investment revenues, will continue to suffer from a large deficit despite the rise in oil revenues, while the fuel and services subsidy bill will remain large, and it is likely that the financial parity price in Kuwait’s budget will drop to $61 per barrel in 2022, which is the second lowest financial breakeven price in the Gulf. after Qatar.
The institute stated that the official reserves, managed by the Central Bank, are more than enough to defend the currency peg, noting that in addition, the assets of the Future Generations Fund will rise to more than 640 billion dollars in 2022 (equivalent to 490 percent of GDP). ).
The report pointed out that the population of Kuwait decreased by 2% last year, and by 1% in the first half of 2021 due to the decline in the number of expatriates.
The institute expected the economic growth of the Gulf to recover gradually to 2.1 percent in 2021 and 4.6 percent in 2022, supported by the rise in oil and gas prices and production, the progress of vaccination campaigns, the return of local economic activity, and the implementation of deeper structural reforms.
He added that despite the rise in commodity prices, inflationary pressures are still contained, as this is supported by the stability of exchange rates, explaining that the continuation of moderate fiscal discipline along with the rise in oil and gas prices will lead to the elimination of the large fiscal deficit last year in 2021 and turning it into a surplus of 1 percent. of GDP by 2022, with the fiscal breakeven point continuing to decline due to the increase in non-oil revenues, the recovery of oil production, and the reduction of government spending at moderate levels.
On the other hand, the institute indicated that the Gulf banking systems are still sound, with capital adequacy ratios exceeding 16 percent, and non-performing loans still close to 2 percent of total loans in Saudi Arabia, Qatar and Kuwait, and between 4 and 8 percent in Bahrain, Oman and the UAE.
He expected the general foreign assets of the Gulf states (official reserves + assets of sovereign wealth funds) to rise to $3.2 trillion by the end of 2022.