Kuwait is enjoying the good times. The country may be dwarfed in size by its neighbours Iraq, Iran and Saudi Arabia, but its current sizeable economic boom is yielding a sense of confidence not seen for 20 years. A record number of construction projects are in the pipeline and with these new developments will inevitably come a requirement for more electricity.
Kuwait is on course to post a 2004 budget surplus of at least $21.9 billion--the state's sixth surplus in a row--and there is every prospect that the trend will continue in 2005. Inflation, which in the past has been a problem for Kuwait, stands at just over two per cent. Currently unemployment remains low although with a population growth rate of four per cent, this remains a potential problem for the future.
The economic numbers look good despite some structural weaknesses remaining. In particular, the government's lack of resolve to drive through economic liberalization plans has created uncertainty in the mind of potential investors. A number of sell-offs under a privatization programme were announced and subsequently postponed in 2004. Economists have also argued for the introduction of income tax law if direct foreign investment is to be attracted. Both issues were put back on the political agenda this year and draft laws are pending.
What the government has done, is to ease restrictions on building regulations and this,...
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