Kuwait's Oil Reliance Warned: IMF Report Calls for Urgent Diversification
Kuwait's economic outlook remains heavily reliant on oil, with warnings of potential risks and calls for diversification, according to a review by Al-Shall Financial Consulting Company of the IMF's latest report.
Al-Shall highlighted Kuwait's increasing budget deficit, projected to reach 7.8 percent in 2025/2026, with a declining current account surplus. The company warned about financing 70 percent of the deficit through borrowing, cautioning about potential negative implications.
Despite Kuwait's real economic growth of 1 percent in the first quarter of 2025, driven by the non-oil sector, the overall economy is projected to expand by around 2.6 percent this year, primarily due to OPEC+ production recovery. This underscores Kuwait's high dependence on oil, as noted in the IMF statement.
Al-Shall's analysis of the IMF report found limited financial reforms, including a 15 percent tax on multinational corporations and the adoption of a public debt law. The analysis stressed the urgent need for policies to diversify income sources, enhance economic competitiveness, and bolster non-oil sector growth.
As of October 2025, there is no public information about a Kuwaiti government plan to reduce oil dependence. The IMF report offered little new information, reinforcing Kuwait's high reliance on oil. Al-Shall's review underscores the need for comprehensive reforms to promote economic diversification and sustainability.
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