Q: How serious a problem is liquidity in the economy and the banking sector for the coming year? Will a cash crunch be averted due to higher oil prices?
A: Kuwait’s government owes Kd2.35bn ($7.8bn) in late payments to public entities, according to Ministry of Finance data, due to the lack of liquidity in the Treasury’s accounts. Even in the absence of a new debt law, Kuwait should be able to fulfil its financial obligations, especially with the higher oil prices. The main issue is not the government’s ability to meet its financial obligations, but the depletion of General Reserve Fund assets. The government has been taking several measures to mitigate this, such as raising funds by way of asset swaps with the Future Generations Fund.