Kuwait’s economic policy department scales back operations post-pandemic

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The Department of Macroeconomic and Fiscal Policy, under Kuwait’s Ministry of Finance, has experienced a shift in its operational status following the Covid-19 pandemic, reports Al-Jarida daily. Established in 2009, the department became notably more active during the pandemic, playing a significant role in coordinating economic policies and strengthening ties with both local and international economic entities. This period of heightened activity was crucial for making important financial decisions and implementing economic reforms aligned with Kuwait’s strategic goals.

However, sources indicate that the department has now reverted to a more passive state. It currently lacks both a director and an executive team, with its responsibilities—particularly those related to formulating economic policies and providing technical and economic opinions—being handled directly by the Ministry of Finance or outsourced to other entities that may not possess the requisite expertise. Previously integral to forecasting expenditures and revenues, as well as contributing to economic reforms and the government’s agenda, the department’s role has significantly diminished.

This change comes as the Ministry of Finance considers integrating the department into its budget management structure, moving away from its previous direct affiliation with the Minister’s Office. Initially established under a cooperation agreement with the International Monetary Fund (IMF), the department was tasked with monitoring developments in Kuwait’s economic sectors and making economic forecasts for the short and medium term. Historically, it played a crucial role in international coordination efforts, working closely with global financial bodies like the World Bank and the IMF.

The reduction in the department’s role has raised concerns about Kuwait’s economic strategy and its ability to navigate future economic challenges effectively. Critics argue that scaling back the department’s influence may lead to less coordinated financial decisions and a lack of strategic alignment in Kuwait’s economic policies.

Over the past four years, the department played a pivotal role in engaging with global advisors, discussing macroeconomic plans, managing public finances, overseeing financial reforms, and enhancing Kuwait’s economic profile through strategic budgetary reforms. During its active period post-Covid-19 pandemic, the department’s advisory role was instrumental in forecasting economic trends, providing insights on rationalizing expenditures, determining budget allocations, and offering technical opinions on inflation and other economic matters. This proactive stance not only supported Kuwait’s efforts in combating inflation but also facilitated its participation in government programs, economic reforms, and development initiatives crucial for the country’s growth.

Recent developments, however, indicate a decline in the department’s operational capacity. Currently lacking both a director and an executive team, the department’s influence has diminished, raising concerns about its ability to maintain a strategic economic direction within the Ministry of Finance. Critics argue that scaling back the department’s role may lead to less disciplined and coherent financial decisions, potentially undermining Kuwait’s economic stability and long-term growth objectives.

In conclusion, while the Department of Macroeconomic and Fiscal Policy initially played a pivotal role in Kuwait’s economic strategy and international relations, its current state of contraction raises questions about the future direction of Kuwait’s economic policies and the effectiveness of its financial management framework.