DUBAI (Reuters) – The International Monetary Fund said on Thursday Kuwait would need strong fiscal consolidation to support growth after its finances were battered last year.
The Gulf state’s economy shrank by 8% last year due to the twin shock of low oil prices and the COVID-19 pandemic, the Fund said in a statement on Thursday, adding that the country’s fiscal balance worsened significantly year-on-year.
The IMF expects a gradual recovery and said that, as the recovery firms up, “strong fiscal consolidation and structural reforms would be needed to preserve fiscal buffers and strengthen growth.”
Kuwait is facing a liquidity squeeze due to a standoff between government and parliament which is stalling much needed reforms.
Reporting by Davide Barbuscia; Editing by Jon Boyle
