Political Outlook - Cabinet Resignation Signals Policy Uncertainty In Years Ahead - FEB 2018

BMI View: Political gridlock will continue in Kuwait in the years ahead, with the current hybrid political system feeding into persistent impasse between the popularly-elected legislature and a cabinet appointed by the emir. While we see little threat to social stability and security , the gridlock will stall much needed economic and fiscal reforms.

We expect that policy uncertainty in Kuwait will remain elevated in the coming years as the strong opposition in the National Assembly will continue to impede fiscal and economic policies and may force the executive to adopt more populist political measures. The government will continue to function, with state employees going about their business and receiving pay - suggesting that the impact on social stability and security will be limited - however continued disputes between the legislative and executive branches of government will make the business environment difficult, especially for foreign investors. Moreover, we see little scope for a near-term resolution. While the current composition of the legislature is making policymaking especially tricky, we believe that the challenges are structural in nature due to a lack of a dispute resolution mechanism between the cabinet (appointed by the hereditary emir) and legislators (elected by popular vote). Indeed, most National Assemblies having proved obstructionist throughout Kuwait's recent history.

Legislative Deadlock To Continue To Create Policy Uncertainty

Opposition Powerful Enough To Obstruct Government
Kuwait - Seats In National Assembly
Note: Total Seats: 50. Source: Media Sources, BMI

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