Now Kuwait has joined many other Gulf states in pushing through private financing across a range of sectors and overhauling its infrastructure, it boasts one of the Middle East's largest and most diverse public-private partnership programmes. But as the country's government opts for PPPs, will the banks follow?
Home to an estimated 9% of the world’s total oil reserves, Kuwait posted its 12th consecutive budget surplus of $18.9bn in 2011. But while the country's coffers are flush with cash, continued political infighting has stymied development, leaving the economy overly reliant on the oil sector and the country's basic infrastructure in need of improvement.
Kuwait's banks are struggling to recover from the significant losses made in 2008 and 2009, suffering with high levels of non-performing loans and a dearth of lending opportunities. The government's economic development plan was designed to both offer a lifeline to the banking sector and diversify the country's oil-reliant economy, but while banks are keen to get on board with the various projects, political indecision is slowing their progress.
In an attempt to tighten its regulatory framework and instil greater confidence in investors, Kuwait’s parliament has approved its first independent capital markets regulator for the Kuwait Stock Exchange. Only time will tell if the move can resuscitate the market.