HIGH EXPECTATIONS.

Author:Frenchman, Michael
 
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1998 heralds a new year of increasing optimism and development in Kuwait. Oil production is rising, privatisation continues apace and the budget is healthier than at any time since the Iraqi invasion.

Early last month more than 4,000 American marines and other troops completed a month-long exercise "Eager Mace" in Kuwait. This followed a rise in tension in the Gulf during the final months of 1997 after more sabre rattling by Iraq's Saddam Hussein who is a constant thorn in the side of, not only Kuwait but the coalition forces in general.

Some observers see the present position of Kuwait as being almost a case of Finlandisation -- having to live, co-exist and survive under the ever present shadow of an Iraqi threat. Nevertheless, life does go on, and several major projects are in hand but the confidence of the pre-invasion period when the Emirate was one of the major economic powerhouses of the Gulf is unlikely to return in the near future.

However all is far from being doom and gloom as 1998 heralds a possible new year of increasing optimism and development. Oil production is rising and foreign participation upstream is now allowed, the Equate petrochemical complex is a landmark in industrial development, there is further rationalisation in the banking sector, privatisation is continuing apace and there is a healthier budget situation for the first time since the Iraqi invasion.

There has been a 16 per cent increase in GDP because of higher oil prices during 1996/1997 and the government now has a budget surplus for the first time since 1991. Mr Isa Al-Maseedi, the oil minister, was reported last November by the Kuwait News Agency to say that oil production capacity stood at 2.4 billion barrels a day which was 400,000 barrels a day more than the OPEC suggested quota.

According to the Central Bank of Kuwait's latest report, public revenues increased by 44.3 per cent over budget to KD 4.3 billion and oil revenues were 52 per cent over budget at KD 3.8 billion. There has been a substantial increase in the contribution to GDP by the non-oil sector of the economy: the population has risen by nearly 4 per cent to about 1.7 million and there has been a steady rise in the number of factories which now total more than 800, with the biggest gain in the wood products sector. Kuwait Airways Corporation (KAC), which has sold off its 20 per cent stake in the private Indian carrier, Jet Airways, is expecting to make a profit of $3.3 million in the next...

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