Mubasher: Kuwait's ruler Sheikh Sabah Al Ahmed Al Sabah has dissolved on 16 October the National Assembly, which was meant to run through July 2017, scheduling for early elections that will take place on 26 November, Moody’s said in a recent report.
“The dissolved National Assembly was likely the most cooperative that the government could hope for because most opposition candidates had boycotted the last election in July 2013. Nevertheless, legislators had voiced strong opposition to the government's unilateral move to hike the price of petrol, which ultimately led to the surprise dissolution,” Moody’s said.
Such developments reflect the institutional challenges that Kuwait faces in reducing its economic and fiscal dependence on oil.
Kuwait’s fiscal deficit would average 2.7% of GDP between 2016 and 2020, while the government debt would rise to around 32% of GDP by 2020, based on the country’s expenditure which is fixed at around 60% of GDP from 2016, in addition to no changes to Moody’s other baseline assumptions of oil price and production, growth, and inflation.
Moody’s said it assess Kuwait's overall institutional capacity as 'Moderate +' one of the weakest in the GCC.
“Slower progress than peers in economic diversification and implementing fiscal reforms in response to the oil price shock is in part because unlike other GCC countries, Kuwait's political environment is more liberal, allowing for unions and for parliament to criticize Kuwait's government effectiveness score in the Worldwide Governance Indicators (WGI), which forms part of our assessment of institutional strength, has deteriorated due to long and burdensome executive and legislative processes, illustrating how institutional blockages can hamper policy implementation,” according to the report.
