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Kuwait Shields Economy From Oil Fluctuations

14 April 2008 , 13:49767
Kuwaiti government swaps dollar to dealing with the fluctuating oil prices, from 1992 to 2007, has protected the state’s economy from the negative impact of such fluctuation.

Speaking on the findings of his PhD research, economist Dr Anwar Al-Shryaan told KUNA that the Kuwaiti government’s policy was successful because it stabilized the oil price at US$30 per barrel when estimating the state’s public expenses and incomes.

However, he said that the government’s conservative programme, especially regarding expenses, started to unwind in the last two years compared to the previous years. He warned that if that continues, it would negatively affect the Kuwaiti economy. Al-Shryaan called on the government to continue its conservative development policy in dealing with the swinging of oil prices, pointing out that his research showed that there is no relation between the current inflation in Kuwait and oil prices.

Inflation will not be solved by an increase in salaries, but by controlling prices through putting a maximum limit on profits of imported products, he added.

He said that the research paper consisted of three parts studying the effects of oil prices on the Kuwaiti economy, whether traditional or Islamic banks were more efficient, and the determinants of the exchange rate of the Kuwaiti Dinar.

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