IMF calls for "strong" fiscal consolidation in Kuwait

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.