Years Since '2035'.. Is It Time to Implement Solutions?

Kuwait is facing a delicate economic phase that requires addressing financial and developmental challenges through a different approach, particularly as the target date for the "New Kuwait 2035" vision draws near, with only a few years remaining. As this deadline approaches, the question is no longer just about the importance of the vision or its objectives, but the more urgent one: What has actually been achieved? To what extent has Kuwait succeeded in building a more diversified economy with less reliance on oil?

In a specialized economic study titled "Economic Challenges and Future Development Prospects 2035," economic researcher Sultan Muaid Al-Jazzaf argues that Kuwait faces significant economic and financial challenges requiring radical and immediate solutions. He points out that the most prominent of these challenges is the persistence of financial imbalances and the recurring deficits in public budgets, amid limited revenue growth and heavy reliance on oil. Al-Jazzaf emphasizes that the problem does not lie with oil as an economic resource in itself, but rather with the excessive dependence on it. This makes public finances more vulnerable to fluctuations in global prices, global demand, and geopolitical conditions, placing financial sustainability under increasing pressure in both the medium and long term.

Al-Jazzaf views Kuwait’s Vision 2035 as a positive step and a roadmap in the right direction, particularly because it aims to diversify the economy and gradually reduce dependence on oil through a series of programs and policies targeting the stimulation of the private sector, creating an attractive environment for local and foreign investments, improving the business environment, supporting digital and industrial projects, and implementing parallel economic and financial reforms. These reforms include rationalizing public spending, enhancing the financial and administrative efficiency of government performance, improving economic productivity, and strengthening the state’s capacity to face future challenges.

However, according to the study, the challenge lies in the passage of time necessitating a re-evaluation of results, and not merely continuing with plans, studies, and recommendations without translating them into productive economic projects. Reaching the year 2035 requires accelerating the pace of implementation, especially since diversifying income sources and building new economic sectors take time before their results appear in GDP, job opportunities, and public revenues. Hence, the need arises to ask frankly: Does what has been achieved so far match the scale of the ambitions carried by the vision?

The study places recurring financial deficits at the forefront of risks facing the Kuwaiti economy, noting a cumulative annual deficit rate reaching up to 38% of revenues. Looking at budgets from 2017/2018 to 2026/2027, study data reveals a clear gap between the trajectory of revenues and expenditures, with total accumulated deficit rising to approximately 53 billion dinars. Meanwhile, expenditures have risen from about 19 billion dinars to 26 billion dinars, while revenues have remained at relatively similar levels, averaging around 17.5 billion dinars. This highlights one of the most prominent problems in public finance: expenditures are growing at a faster rate than revenues, while oil revenues remain the primary source relied upon to bridge the gap.

The study indicates that reaching a budget break-even point requires an oil price of around $90 per barrel, considering that betting on the price stabilizing at or above this level is not a sustainable strategy upon which to build the future of public finance. The equation is simple: the higher oil prices rise, the better public finances become; the lower they fall, the more the deficit re-emerges. Discussing income diversification does not mean diminishing the importance of the oil sector for Kuwait; oil will remain a pivotal sector for many years. However, the challenge lies in transforming oil from a single primary source of revenue into one of the drivers of a diversified economy. This highlights the importance of developing non-oil revenues, not only through imposing fees or increasing financial burdens, but by creating new economic activities capable of generating added value, revenues, and job opportunities. The true alternative to deficit is not merely reducing expenditures, but building an economy that generates new income.

**Economic Diversification: From Opportunity Studies to Implementation Decisions**

The study argues that diversifying income sources has become an economic necessity, not a luxury or a deferred option. According to Al-Jazzaf, Kuwait already possesses a large number of economic opportunities that can be developed without creating new sectors from scratch, but rather by restructuring some sectors, changing policies, removing obstacles, developing work mechanisms, and attracting investments and specialized expertise. He notes that the government has taken several steps and initiatives in recent years, especially in the last two years, but there is still a need to accelerate implementation and expand the scope of reform. Kuwait does not suffer from a lack of studies or ideas; rather, the greater challenge lies in transforming ideas into projects, projects into productive sectors, and sectors into sustainable income sources. Therefore, the next phase must witness a clear transition from studying opportunities to implementing them, with defined objectives, specific responsibilities, and measurable performance indicators.

**The 2 Billion Dinars Fund: Reinventing the Role of the Small Projects Fund**

More than 13 years after the establishment of the Small and Medium Enterprises Fund in 2013, Al-Jazzaf believes the time is right to re-evaluate the fund’s experience and strategy, and to measure its contribution to the national economy and job creation for national cadres. The study proposes redirecting the fund’s resources toward developmental, strategic, and high-quality projects, rather than limiting itself to financing traditional projects.

**Agricultural Holdings and Grazing Lands**

Agricultural and animal holdings represent one of the opportunities that Al-Jazzaf believes have not been utilized optimally so far. Despite continuous government support for this sector, its contribution to the national economy, covering local market needs, and employment remains limited. The study indicates the existence of approximately 13,650 agricultural and animal plots, with a geographical area exceeding 800 square kilometers, and annual support exceeding 39 million dinars. However, the study estimates the number of productive farms at only about 200 farms, which is approximately 1% according to its estimates. These figures raise a question about how to achieve an economic return commensurate with the size of the land and support provided. The study believes that what is required is not the cancellation of support, but rebuilding the sector on clear productivity bases. This includes setting productivity standards, linking the benefit of the plot to actual production levels, encouraging specialized companies to invest, and developing industries related to agricultural and animal production, such as packaging, refrigeration, storage, transportation, and food processing. Expansion can also occur in areas such as aquaculture, animal production, and manufacturing industries.

**Entertainment and Tourism**

Kuwait possesses significant foundations that could make entertainment and tourism one of the promising sectors in the economy, particularly given that the Kuwait Projects Company (Mubadala) owns lands, facilities, structures, and assets, including parks, recreational facilities, Kuwait Towers, Al-Khiran Park, and a waterfront extending over 20 kilometers. However, the study believes that the volume of available assets and potential is not sufficiently reflected in economic and financial returns. Therefore, Al-Jazzaf proposes reconsidering the model for managing and operating these assets, whether through restructuring the company, involving specialized investors, engaging the private sector, utilizing foreign expertise, or listing part of the ownership in the stock market as decided by the state. The goal is not privatization for its own sake, but rather improving the efficiency of asset utilization and transforming them into sustainable economic activities. Modern entertainment has become an integrated industry that drives hotels, aviation, restaurants, markets, transportation, retail, events, and services. Every dinar a Kuwaiti citizen spends on tourism and entertainment abroad represents, conversely, an opportunity to retain a portion of it within the local economy if competitive tourism and entertainment products are available.

**Industry and Crafts**

The study confirms that the industrial sector represents one of the most important drivers of development in modern economies, due to the added value, job opportunities, export capacity, and reduced dependence on imports it provides. The importance of industry extends beyond the economic aspect to food and economic security, especially given the disruptions in supply chains and transportation movements witnessed in the region during recent crises. Therefore, the study believes Kuwait needs a more ambitious industrial policy that focuses on small, light, and craft industries, granting them greater opportunities in government purchases and projects, and encouraging them to export. The ultimate goal is to build a more diversified industrial base capable of production and competition, helping to reduce some commodity costs, decrease dependence on imports, and open new markets for Kuwaiti products.

**The Private Sector**

The study places empowering the private sector at the heart of the economic reform process. According to Al-Jazzaf, the private sector still relies heavily on government spending and state-funded projects, while its contribution to GDP, according to study estimates, remains at limited levels not exceeding 10%. He believes that what is required is to create an environment that enables the private sector to lead economic activity by providing investment opportunities, supportive legislation, and strategic partnerships.

**Privatization and Partnership**

The study points to public sectors and facilities where the operating model can be reconsidered, including transportation, postal services, aviation, and some public utilities and services. The private sector can be involved in their management and operation, thereby increasing efficiency and reducing financial and administrative burdens on the state. Specifically in the postal sector, there is a need to develop infrastructure to keep pace with e-commerce, which the study estimates at around $1.7 billion in Kuwait. The transport sector can also be developed through a modern entity in partnership with the private sector, offering advanced services for buses, taxis, and smart transport, helping to address part of the traffic crisis, serve new infrastructure projects, and reduce emissions.

**Artificial Intelligence: Kuwait’s Next Wealth**

The study believes that investing in knowledge, artificial intelligence, and digital technology is no longer a future option, but has become an essential part of the global economy.

**Health and Medical Tourism**

The study poses a direct question: Why not transform medical tourism from a sector that consumes public spending into a productive economic activity? It notes that spending on treatment abroad costs the state more than 3 billion dinars annually, while Kuwait possesses hospitals, medical centers, modern equipment, and medical, nursing, and technical expertise. The study believes that developing medical tourism according to clear legislation and regulations can convert part of this spending into activity within Kuwait, while simultaneously attracting patients from regional countries. This will reflect positively on hotels, aviation, transportation, insurance, restaurants, and supporting services, alongside developing medical facilities and enhancing their competitiveness. Given Kuwait’s location and proximity to regional markets, specific medical specialties can be developed targeting Gulf and regional patients, thereby converting part of health spending into new economic revenues.

**Oil: Not Just a Barrel for Export**

Although the primary goal of diversification is to reduce dependence on oil, the study confirms that Kuwait can simultaneously maximize the added value of the oil sector itself. Kuwait possesses oil expertise spanning more than 70 years, large reserves, and a long-standing experience in the oil industry and related investments. Among the proposals is the creation of a specialized global center for conferences, studies, research, and information related to energy, along with applied institutes, research centers, and advanced laboratories in oil and energy sciences. Expansion can also occur in complementary industries, petrochemicals, and energy-related industries, bringing in specialized global companies in partnerships with the local private sector. The core idea is to transition from exporting raw materials to maximizing added value through manufacturing, services, technology, and expertise.

**Kuwait: From Oil Producer to Energy Industry Hub**

Maximizing the added value of oil does not conflict with economic diversification; rather, it can be one of its pathways, through petrochemicals, supporting industries, oil services, scientific research, training, and technology.

**Kuwait Before the 2035 Test**

The issue is no longer about knowing which sectors can be developed; the list is clear: Industry, Agriculture, Tourism and Entertainment, Health and Medical Tourism, Technology and Artificial Intelligence, Logistics Services, the Private Sector, and Complementary Oil Industries. The real challenge is transforming these sectors from ideas and studies into projects, from projects into productive companies, and from companies into income sources and job opportunities. As 2035 approaches, the most prominent message from Sultan Muaid Al-Jazzaf’s study is clear: Kuwait does not need more time to study opportunities, but rather a bold decision to convert existing opportunities into a productive economy. Oil will remain an important resource, but the sustainability of the state cannot remain hostage to a barrel price determined in global markets. Economic diversification will not be achieved through slogans, but by redirecting funds and assets toward production, empowering the private sector, attracting investment, improving government efficiency, and converting underutilized sectors into genuine contributors to GDP and income.

**The Real Battle: Time**

At the end of the study, Al-Jazzaf places economic reform before a clear equation: the more delayed the implementation of reforms, the higher the risks, and the greater the difficulty and cost of addressing imbalances. Financial deficits cannot be dealt with indefinitely through rising oil prices or financial instruments, nor can the economy continue to rely on a single resource while the global energy map changes and technological and economic transformations accelerate. Therefore, what is required is not to search for a single solution to the crisis, but a comprehensive package of reforms starting with rationalizing spending and improving government efficiency, and ending with empowering the private sector and developing non-oil revenues.

According to the study, Kuwait possesses money, expertise, geographical location, assets, and developable sectors, as well as investment funds, human capabilities, and infrastructure that can be built upon. However, the difference between possessing potential and achieving economic returns from it lies in decision-making, implementation, and speed.

**Available Funds... and the Need to Maximize Their Impact**

Economic researcher Sultan Muaid Al-Jazzaf believes that redirecting resources of the Small and Medium Enterprises Fund toward viable industrial, agricultural, technological, and craft projects can transform available funds from a financing tool into a real lever for economic diversification.

**Growth Engines**

* **Small and Medium Enterprises Fund (2 Billion Dinars):** Redirecting toward financing developmental projects.

* **Agricultural Holdings and Grazing Lands:** Utilizing agricultural areas in the best possible way.

* **Entertainment and Tourism:** Leveraging the value of these massive assets and underutilized potential.

* **Industrial and Craft Sector:** Developing the sector can contribute to achieving self-sufficiency.

* **Investment in Knowledge, Artificial Intelligence, and Digital Technology.**

* **Investment in the Health Sector and Medical Tourism:** Currently costing more than 3 billion dinars annually.