Kuwait: 2025 Article IV Consultation-Press Release; and Staff Report

International Monetary Fund

No 2026/052, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2025 Article IV Consultation highlights that Kuwait has started the transition from an oil dependent welfare state toward a dynamic and diversified economy. Reform momentum has been building, starting with enactment of the Financing and Liquidity Law. Alongside a public investment scale-up, the authorities are working on wide-ranging fiscal and structural reforms, including to energy subsidies and mortgage lending. A recovery is underway, driven by the unwinding of Organization of the Petroleum Exporting Countries (OPEC+) production cuts and robust non-oil growth, while inflation continues to moderate. Lower oil revenues have weakened the external and fiscal positions, but buffers remain strong. Gradual fiscal consolidation at a pace of about 1 percent of gross domestic product per year would be needed over the next decade to achieve long-term fiscal sustainability. The priorities are to mobilize non-oil revenue, rationalize the public sector wage bill, reform energy subsidies, and improve infrastructure. A comprehensive and well-sequenced structural reform package should be implemented to unify the labor market and improve the business environment. The priorities include reducing the public sector wage premium, scaling up the supply of housing, and deepening the financial markets. Data provision has some shortcomings that somewhat hamper surveillance.

Keywords: fund holding; fund relation; FSAP participation; Kuwait's de jure exchange rate arrangement; capital market development; Oil; Public sector; Oil, gas and mining taxes; Public sector wages; Global; Middle East; Central Asia (search for similar items in EconPapers)
Pages: 62
Date: 2026-02-24
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