Outlook for 2011-15

• The emir, Sheikh Sabah al-Ahmed al-Jabr al-Sabah, will remain the ultimate political authority. Disputes between parliament and the government are likely to persist in 2011-15, hampering progress on economic development.
• The popular uprisings witnessed across the Middle East and North Africa region in early 2011 could spread to Kuwait, but they are unlikely to target the emir, focusing instead on the prime minister and cabinet.
• Relatively high oil prices coupled with a step-up in oil output from 2012 will underpin our forecast of solid fiscal performance in 2011-15, but the surplus will narrow because of higher capital expenditure.
• Kuwaiti interest rates will broadly track the trend in US interest rates over the forecast period, largely because the currency is pegged to a basket of currencies with a heavy US dollar weighting.
• Real GDP growth will pick up in 2011 as oil revenue and production rise, but rising imports will dampen the growth rate. Higher investment and oil output from 2012 will boost annual average GDP growth to just over 5% in 2012-15.
• Inflation is expected to peak at an average of 6.5% in 2011 owing to high commodity prices. It will ease thereafter to an average of 4.3% in 2012-15.
• The current account will record robust surpluses throughout the forecast period owing to strong oil export revenue, which will more than offset rising import costs and deficits on the non-merchandise trade account.

Monthly review

• The emir reappointed Sheikh Nasser Mohammed al-Ahmed al-Sabah as prime minister only days after the government resigned at the end of March in protest at a spate of interpellation motions against ministers by MPs.
• A new cabinet, which is likely to include many of the same faces, is expected to take office in mid-May, leaving only a short time before the National Assembly (parliament) enters its summer recess.
• The opposition has said that it will table new interpellation motions against the prime minister and any other members of the former cabinet that are reinstated.
• Relations with Iran have deteriorated amid regional tensions over the political crisis in Bahrain. Kuwait has expelled three Iranian diplomats and sentenced three alleged members of an Iranian spy network to death.
• The Ministry of Electricity and Water plans to invest US$27bn in new power and water plants. Kuwait Petroleum Corporation has said it might retender the Al Zour refinery and Clean Fuels Project before the end of the year.

The Economist Intelligence Unit expects the emir, Sheikh Sabah al-Ahmed al-Jabr al-Sabah, to remain the ultimate executive authority in 2011-15. Despite the concentration of power in the hands of the emir and executive, Kuwait has the strongest National Assembly (parliament) of any of the Gulf Arab monarchies. Parliament is wholly elected, with the first female members of parliament (MPs) elected in 2009, and there is robust political debate. Relations between the Al Sabah-dominated government and parliament are often fraught and are expected to remain tense throughout the forecast period. In the most recent sign of continuing friction, the cabinet resigned for the sixth time since 2006 at the end of March. Although opposition forces in parliament are highly vocal and regularly impede the legislative process, they lack coherence and are deeply divided on many issues.

The outbreak of popular unrest and opposition to authoritarian regimes in North Africa and some Middle Eastern countries since the beginning of 2011 poses a challenge to the authorities. There were protests in February and March in Kuwait by the bidoon (stateless) population, seeking improved living conditions and greater rights. However, the demonstrations do not constitute a new or major threat. Indeed, the bidoon are probably seeking to capitalise on the fact that regimes across the region are feeling more vulnerable and will be more inclined to make concessions to keep their populations happy.

Perhaps more ominous were protests by the Shia community (about 30% of the population) in March, although the demonstrations were in support of the Bahraini Shia cause rather than being directed against the Kuwaiti authorities. There were calls from the Shia population for greater religious freedom and accusations of discrimination in March, but the protests are likely to be contained. Periodic rises in tension between the Sunni Muslim majority and the Shia minority in the past-often inflamed by broader regional confrontations-have typically been short-lived.

We believe that if unrest were to break out on a wider scale in Kuwait, it would probably target members of the cabinet or the prime minister, Sheikh Nasser Mohammed al-Ahmed al-Sabah, rather than the monarchy itself. The government, dominated by members of the ruling family and led by the prime minister, resigned in late March after several interpellation requests from MPs. Following the previous five resignations by the cabinet, the emir reappointed Sheikh Nasser Mohammed every time and did so once again on this most recent occasion. However, the prime minister's authority has repeatedly been called into question by parliament and even by members of the Al Sabah. Youth groups and other factions say that they will continue to lobby for a new prime minister and government. Political bickering is expected to continue for much of this year, with negative consequences for legislative effectiveness.

In the first half of 2010 the parliamentary opposition seemed to recognise the urgent need for economic legislation and adopted a more conciliatory approach to a number of important economic bills. However, tensions resurfaced in the second half of the year. A violent crackdown on a meeting of opposition MPs in early December led to the leaders of the three largest opposition groups filing for an interpellation of the prime minister, on the issue of public freedoms. The questioning took place behind closed doors in late December, with the opposition subsequently filing a non-co-operation motion against Sheikh Nasser Mohammed. The prime minister won the motion by a narrow 25 votes to 22, but this compares unfavourably with a motion against him in December 2009, which he won by 35 votes.

The political succession is uncertain. The emir is in his 80s and the crown prince, Sheikh Nawaf al-Ahmed al-Jabr al-Sabah, who is the emir's half-brother, is in his 70s. Another brother, Sheikh Mishaal al-Ahmed al-Jabr al-Sabah, the deputy head of the National Guard who acts as a mediator within the family, is a strong candidate. The prime minister is a nephew and protégé of the emir, but his status has been undermined by his parliamentary difficulties. The head of the emiri diwan (akin to a royal court), Sheikh Nasser Sabah al-Ahmed al-Sabah, the emir's son, is another possible contender, and has good relations with members of the ruling elite, but his succession so soon after his father's tenure might prompt resentment. There is also a chance that a member of the sidelined Al Salem branch of the ruling family-which formerly alternated leadership with the now dominant Al Jabr line-could become the next crown prince. Whatever the outcome of the debate, it is likely to take place well out of the public glare, with the ruling family closely bound by intermarriage and well aware that open squabbling would pose a threat to their overall legitimacy.

The next National Assembly election is due in May 2013. However, if legislative paralysis returns, the emir may enact an early dissolution of parliament. Calls for the introduction of a single-constituency system or the legalisation of formal political parties will continue to be resisted by the government. Smaller tribes and sectional interests will remain disempowered by the 2006 electoral law (which reduced the number of constituencies from 25 to five). As a result, the next vote is unlikely to lead to major political change.

Kuwait's foreign policy in 2011-15 will continue to be founded on its long-standing strategic alliance with the US. This could complicate efforts to improve ties with Iran, which have grown increasingly strained owing to heightened regional tensions. Although Kuwait will formally support further integration of the Gulf Co-operation Council (GCC), it will diverge from the GCC on policy issues when its national interest is at stake. Relations with Iraq remain tense as a result of disagreements over the demarcation of borders and Iraq's reparation payments, but there are increasing efforts on the diplomatic front to build bridges. Tensions are likely to persist and flare up at regular intervals over the next few years, but Kuwait could benefit economically if it develops as a transshipment and transport hub for Iraq's southern oilfields.

The 2010-14 Kuwait Development Plan, involving expenditure of US$104bn, seeks to diversify the economy away from oil and to increase the role of the private sector. It also aims to make Kuwait a regional trade and finance centre by 2014. After a promising start in 2010, including the passage of the much-delayed privatisation law, progress appeared to stall in the second half of the year, with fiscal data suggesting very little in the way of capital expenditure. The country's first independent water and power project is progressing, but the government has recently announced a delay in the privatisation of Kuwait Airways Corporation. Structural economic reform, particularly liberalisation, is still expected to proceed only gradually as political bickering and the unwieldy bureaucracy lead to delays with projects.

Government spending rose by 40.1% year on year in the first nine months of fiscal year 2010/11 (April-March), largely because of sharply higher spending in the categories of goods and services and miscellaneous transfers. Increases in transfers and benefits, announced in February, kept spending growth strong in the final quarter of the year. Revenue growth was also strong in the final quarter of 2010/11 owing to higher oil production and prices. Our estimate for the budget surplus is now US$6.9bn, or 19% of GDP. In the medium term, Kuwait's fiscal policy is expected to remain expansionary. Capital expenditure is set to pick up given the urgent need for infrastructure improvements, and in order to meet the ambitious development goals outlined in the five-year plan. Current expenditure is also set to increase steadily as the government wage bill rises-assuming only limited success in replacing expatriate labour with nationals in the private sector-and as payments are made to the social security fund. Oil will continue to account for the bulk of budget revenue, as no new income or sales taxes are expected. Income from the foreign investments of the Kuwait Investment Authority is expected to increase steadily, although low global interest rates will constrain income in the first half of the forecast period. Overall, the budget surplus is set to narrow to just under 8% of GDP in 2015/16 owing to higher spending and declining oil prices from 2012.

Money supply developments in Kuwait are not reflecting the recent rise in inflation; broad money (M2) growth was running at just 1% in January 2011. However, M2 growth subsequently surged in February to a one-year high of 5.2%. The data from the Central Bank of Kuwait show that this was largely due to an increase in the net foreign assets of the Central Bank, most likely owing to higher oil prices. The large fiscal handouts announced by the emir in February are likely to have also contributed. Interestingly, lending to the private sector remained in the doldrums. Higher state transfers and benefits for citizens are boosting the money supply, but it seems likely that much of the money will go into consumption (of imports) rather than into investment goods.

Kuwaiti interest rates generally track those set by the Federal Reserve (the US central bank), as the US dollar makes up the bulk of the undisclosed, trade-weighted basket of currencies to which the Kuwaiti dinar is pegged. Kuwaiti rates are expected to stay largely unchanged until the Federal Reserve starts to tighten policy, expected in 2012, as inflationary pressures remain under control.

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Official GDP data for 2009 are not yet available, but unofficial reports suggest that real GDP contracted by 4.6%. We estimate that real GDP growth recovered to 2.7% in 2010, as imports contracted. Comments from the governor of the Central Bank, Sheikh Salem Abdel-Aziz al-Sabah, suggested that growth stalled in the second half of 2010, after a strong start to the year. However, higher oil prices and a small increase in production (of around 1%) supported growth in 2010.

We expect GDP growth to accelerate in 2011, as oil production picks up. Although there has been no change in the official OPEC production ceiling, Kuwait has followed the lead of Saudi Arabia and pledged to produce more oil to fill the gap left by cuts in Libyan production. The latest data from the International Energy Agency show that output rose in February and March. Growth in oil production is expected to continue in 2012 and beyond as Kuwait starts to produce closer to capacity and as new fields come on stream. We forecast that higher oil output coupled with steady growth in both public and private investment will lead to average annual GDP growth of 5.2% in 2012-15.

We estimate that growth in government consumption and fixed investment turned positive but was subdued in 2010 as the government's ambitious spending plans will only start to feed through to stronger physical demand from 2011. We expect both public and private investment to pick up more markedly in 2011. Recent legislation, including a privatisation law, designed to encourage private-sector investment in the economy, should gradually start to bear fruit. However, bureaucratic problems and tensions between the government and parliament are still likely to hamper the disbursement capacity of the state. With strong growth in investment, requiring an ongoing influx of expatriate workers and growth in population, we expect private consumption to grow steadily in 2011-15, at an annual average rate of 5.3%.

Export growth will track the expected increase in oil production in 2011-12. Import growth is forecast to rebound strongly in 2011-15, particularly in 2012-13, owing to increased spending on capital investment by the government and the private sector, in particular on large infrastructure and oil-related projects.

The non-oil sector is projected to remain relatively small, despite efforts to diversify the economy. The manufacturing sector will continue to focus on petrochemicals, meaning that its growth will remain tied to Kuwait's ability to increase oil output. By contrast, the services sector will provide more room for the growth of private enterprise. Kuwait is well placed to benefit from the resumption of investment in Iraq's oil sector, and we expect an expansion in the provision of financial services, logistics and telecommunications in 2011-15.

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Inflation rose steadily in 2010, reaching 6% in December, up from just 2.1% at end-2009. Higher international food prices (18% of the consumer price index) were a key factor in the rise. However, in January the inflation rate fell back to 5.2% as the food price subsector of the index fell by 0.8%, while most other prices were broadly flat. Nevertheless, the recent strength of international oil and other commodity prices suggests that inflation rates will pick up again in the first half of this year, and we forecast that inflation will average 6.5% in 2011. The emir's recent decision to increase transfers and benefits to citizens will only serve to add to inflationary pressures in the economy. Some strengthening of the dollar in 2011 will contain price pressures, and we expect inflation to average 4.3% over the remainder of the forecast period. The government's extensive subsidy system-which would be expanded if imported inflationary pressures rose strongly-will prevent higher inflation, as will more cautious credit growth and lower regional liquidity than in 2005-08.

We expect the dinar to appreciate slightly against the dollar in 2011 as the currency basket is managed in an attempt to ease the pressure of rising dollar-denominated commodity prices. However, commodity price pressures will ease subsequently, and from 2012 we expect the dinar to depreciate slightly against the dollar to KD0.291:US$1 at end-2015. The dinar will continue to be supported by large current-account surpluses, an extensive foreign asset base and the government's secure fiscal position. Furthermore, in the unlikely event of downward pressure building on the dinar, the authorities could manage interest rates or draw upon some of the country's huge stock of foreign-currency assets to support it.

We estimate that the current-account surplus reached US$43.1bn, or 33.8% of GDP, in 2010. Data from the Central Bank showed a surge in imports in the final quarter of the year. The preliminary trade data suggest that imports rose by just under 10% in 2010, after falling by 26% in 2009. As expected, oil export earnings rose strongly, up by 24% year on year. Kuwait is expected to continue to record large surpluses in 2011-15, but their share of GDP will fall as import demand picks up and oil prices fall in the latter half of the forecast period. Oil export earnings will continue to account for the bulk of export revenue, at US$76.6bn, or 93% of the total, in 2015. In 2011-15 we expect rising investment, by both the government and the private sector, to lead to strong growth in the import bill.

In contrast to the healthy trade surplus, Kuwait's non-merchandise balance is forecast to remain in deficit during the forecast period. Income credits are expected to grow steadily in 2011-15, chiefly reflecting earnings on the country's large stock of foreign assets. Higher income inflows will more than offset a rise in income debits (owing to rising profit repatriation by foreign firms), boosting the income surplus from an estimated US$8.6bn in 2010 to nearly US$13bn in 2015. However, the services deficit will widen sharply, as a rise in import-driven services debits outstrips a steady increase in services credits from overseas banking and investment services. In addition, the current transfers account will continue to show a large and growing deficit, as outward remittances from Kuwait's many foreign workers continue to increase.

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Sheikh Sabah al-Ahmed al-Jabr al-Sabah, the emir, reappointed Sheikh Nasser Mohammed al-Ahmed al-Sabah, the prime minister, on April 5th and has asked him to form his seventh cabinet. The new government was due to be announced in the first week of May, but is not expected to take office officially until May 17th, the date of the next regular session of the National Assembly (parliament). Some members of parliament (MPs) have criticised what they see as a delay to the formation of the new cabinet, saying that it has hampered the functioning of parliament. Prolonging the appointment process will also serve to limit the time available for further clashes between the government and the National Assembly, which begins its four-month long summer recess in July.

The previous government resigned on March 31st, making it the sixth time the cabinet has stood down since the prime minister was first appointed in 2006. The government submitted its resignation in protest against a spate of interpellation motions filed by MPs against ministers, including over their handling of the escalating political situation in Bahrain. In particular, three members of the royal family were targeted: Sheikh Ahmed Fahad al-Sabah, deputy prime minister for economic affairs and housing and development minister; Sheikh Mohammed Sabah al-Salem al-Sabah, deputy prime minister and foreign minister; and Sheikh Ahmed Abdullah al-Sabah, the oil and information minister. It is likely that many of the same ministers, particularly those from the ruling family, will again assume positions in the new cabinet.

In recent months the campaign against Sheikh Nasser Mohammed in particular has intensified not only from opposition MPs, but also from youth groups, which are continuing to call for his removal. Although the requests to question the former government were dropped following its resignation, the opposition has said that it intends to grill any former cabinet ministers that are reappointed, as well as the prime minister himself. One MP, Abdurrahman al-Anjari, remarked that the new government would essentially be "dead before it's even born" if the prime minister remains in place, pointing to Sheikh Nasser Mohammed's narrow victory in a no-confidence vote held in January. The emir's decision to reinstate the outgoing prime minister will result in continuing tensions between the government and the legislature, stymieing policymaking and leading to the possible dissolution of parliament before the scheduled election in May 2013.

Youth groups such as the Soor al-Khames (Fifth Fence) and Kafi (Enough) movements that have been organising on Twitter and Facebook have continued to demand a new government and reform of the political system. A countrywide signature campaign launched by Soor al-Khames and Kafi has attracted criticism from pro-government MPs, with Salwa al-Jassar, an independent, calling it unconstitutional. A number of other groups, including the parliamentary Popular Action Bloc, the Development and Reform Bloc, the Islamic Constitutional Movement and the National Union of Students, have joined the youth movements. Together, they have established a committee that will, according to Waleed al-Tabtabaei, an Islamist MP, call for "a new prime minister, new government and a new approach".

This increased mobilisation and campaigning by youth groups is indicative of a growing frustration with the status quo and the ongoing stalemate in Kuwaiti politics. However, a relatively open political system and a vocal parliament have acted as a safety valve (and the country's oil wealth as a safety net) that is largely absent in neighbouring countries.

Relations with Iran have deteriorated as a result of the unfolding crisis in Bahrain. In late March a Kuwaiti court sentenced three individuals, allegedly members of an Iranian spy ring, to death. According to officials, the two Iranians and a Kuwaiti had served in the Kuwaiti military until their arrest in May 2010. Separately, three Iranian diplomats accused of having connections to the spy ring have been expelled from the country. Iran has denied the allegations of espionage and in retaliation has deported several Kuwaiti diplomats. The moves come amid deteriorating relations between members of the Gulf Co-operation Council (GCC) and Iran on the back of turmoil in Bahrain and the increasingly sectarian framing of the crisis in the region. Bahrain has put three individuals accused of working as spies for Iran on trial, and the GCC continues to issue stern warnings against alleged Iranian interference and provocation. Kuwaiti efforts to mediate between the opposition and the government in Bahrain have been rebuffed by the latter.

The increasingly sectarian politics in the region could also prove domestically divisive in Kuwait where around 30% of the population is Shia. Sectarian conflict in Kuwait has been largely absent since the 1980s, but sensitivities have recently been exacerbated by the government's contribution of naval vessels to a GCC military mission in Bahrain. Although the decision to refrain from sending ground troops has been lauded by Shia groups, others have criticised the move and pushed for Kuwait to take a more active stance in support of Bahrain's Sunni royal family. Public rallies by Kuwaiti Shia in solidarity with their Bahraini coreligionists have been followed by counter rallies in support of Bahrain's ruling family denouncing alleged Iranian interference. The fallout over Bahrain led Saleh Ashour, a Shia MP, to ask to question Sheikh Mohammed, the foreign minister, over what he argued was the government's failure to act on the alleged defamation of Kuwaiti Shia families and other political figures on Bahraini television. The government's resignation was welcomed by some Kuwaitis as a means to avoid Mr Ashour's questions, which, they argued, could have further stoked sectarian tensions.

The Ministry of Electricity and Water will invest KD7.5bn (US$26bn) up to 2014 to expand the country's water and power production capacity, Suhaila Marafi, the director of studies and research at the ministry announced at a business conference in Abu Dhabi in late March. The country needs to add 10,000 mw to its existing power generation capacity of 11,300 mw by 2020 and to raise water capacity to 800m gallons/day (gal/d) from 470m gal/d, she said. However, based on the ministry's previous track record-utilities projects have traditionally faced long delays-these goals are likely to prove ambitious.

Separately, Kuwait Petroleum Corporation (KPC) has said that it could relaunch tenders for the KD5bn Al Zour refinery and the KD4bn Clean Fuels Project before the end of the year if it receives approval from the Supreme Petroleum Council. Speaking at a conference in early April, KPC's managing director for planning, Hashim al-Refaai, said that the company will invest US$90bn in the oil and gas sector up to 2015 and US$340bn by 2030. KPC has said that it aims to raise oil production from its current level of 2.4m barrels/day (b/d) to 3.5m b/d by 2015 and 4m b/d by 2020.

However, the political stalemate in the country continues to hamper investment projects. Prior to the most recent resignation of the government, the deputy prime minister for economic affairs, Sheikh Ahmed Fahad, was facing an interpellation motion in parliament over the handling of the US$104bn Kuwait Development Plan launched last year. Some MPs argued that the government delayed the approval of draft bills for the plan. It is unclear, therefore, whether projects under the development plan will suffer the same fate as Project Kuwait, a scheme launched in 1997 to increase oil and gas output that has made very little headway thanks to political opposition.

In late April Kuwait Financial Centre (Markaz), a private asset management firm, issued a report analysing the five-year Kuwait Development Plan. The plan for fiscal year 2010/11 includes 884 projects worth KD5bn. Half of these were in the financial/design approval or implementation phase as of the first half of the year, the report said. In addition, 259 projects were in the final-approval stage and 141 were "in the pipeline or have not yet been started". Of the KD5bn budgeted for the year, KD735m (US$2.6bn) was spent in the first half.

The Kuwait Investment Authority (KIA), the country's sovereign wealth fund, has announced plans to establish a US$3.6bn fund to invest in local commercial real estate. According to KUNA, the state news agency, the portfolio will initially be managed by Kuwait Finance House. The move reflects an effort to bolster the ailing commercial real estate sector where prices have been depressed since the financial crisis, largely owing to an oversupply of properties. The sector is likely to come under further pressure particularly given the release of more than 70 floors of office space with the completion of Kuwait's tallest building, the Al Hamra Tower, later in 2011. The KIA has previously invested in the Kuwaiti stockmarket in order to support the bourse and improve liquidity during the financial crisis.

Growth in the money supply (M2) was the highest in a year in February, at 5.2% year on year and 6.3% month on month, owing to an 18.9% month-on-month increase in the Central Bank of Kuwait's net foreign assets. The money supply was also boosted by a KD1,000 (US$3,500) grant for all Kuwaiti citizens (awarded by the emir), which was deposited into their accounts in late February. Money supply growth was 0.1% month on month and 5.3% year on year in March. The grant was also reflected in the large month-on-month jump in sight and savings deposits, of 13.2% and 13.7% respectively.

Despite faster money supply growth, lending remains weak. Lending to the private sector increased only slightly in February and March, by 0.1% and 0.3% respectively, in month-on-month terms. Local bank cash credit facilities for consumers continued to grow at double-digit rates, registering a 14.7% year-on-year increase in February (0.5% in month-on-month terms). Personal loans for purchases of securities fell by 5.7% year on year in March (and by 1% month on month), while real estate loans were up slightly in year-on-year terms, by 1.2%, but down on a monthly basis, by 0.4%. Despite ample liquidity in the market and low interest rates, lending has remained weak, with ongoing uncertainty over the financial sector and investment companies in particular.

Inflation rose to 5.3% year on year in February, compared with 5.2% in January largely because of base effects. In month-on-month terms, prices declined by 0.1% as a result of a continued fall in food prices, which dropped by 0.5%. Prices of beverages and tobacco and clothing also continued to register declines on a month-on-month basis. Housing services and the price of household goods and services remained steady in month-on-month terms. The only increases were registered in the cost of education and medical services, which rose by 0.3% month on month, and other goods and services, which climbed 0.1% month on month. Although lower food prices have meant steadying headline inflation in recent months, price pressures owing to large public-sector wage rises and increases in government transfers remain a risk in the coming months.

The death in mid-April of Nasser al-Kharafi, the former chairman of the Kharafi Group, may prove to be a further setback to the planned sale of a 46% stake in Zain, Kuwait's largest mobile-phone company. The Kharafi family, estimated to be worth US$10.4bn by Forbes magazine, is the wealthiest in the country and owns the Kharafi Group, the second-largest shareholder in Zain. The conglomerate had been keen to sell its Zain shares after it was badly affected by the global financial crisis and domestic real estate crash.

In March the UAE's Etisalat withdrew its bid to buy a controlling 46% stake in Zain, following ongoing setbacks (April 2011, Economic policy). The US$11.7bn sale was launched in September 2010 but has faced political and shareholder opposition. In early March Zain's board accepted a joint bid by the Kingdom Holding Company (whose chairman is Prince Alwaleed bin Talal, a nephew of the Saudi king) and the Bahrain Telecommunications Company (Batelco) for its 25% stake in Zain Saudi Arabia. As Etisalat has existing operations in Saudi Arabia, the sale of Zain's Saudi assets was a precondition for the deal.

A new Capital Market Law, which came into effect in March, means that any company seeking to acquire more than 30% of a listed Kuwaiti entity must offer the same share price to all other shareholders.

According to MEED, a Dubai-based business magazine, the Partnerships Technical Bureau (PTB), the government body overseeing public-private partnerships, issued a request for proposals for the planned Al Zour independent water and power project (IWPP) in late March. Bids for the country's first ever IWPP are due to be submitted by September 27th. The plant will have a capacity of 1,500 mw of power and 102-107m gal/d of desalinated water.

The PTB has prequalified the following 15 companies or consortia to bid for the project:

• Acwa Power (Saudi Arabia), Gulf Investment Corporation (Kuwait), Samsung C&T (South Korea), Itochu Corporation (Japan);
• GE International (US);
• Malakoff International (Malaysia), SK Group (South Korea);
• Marubeni Corporation (Japan), Alghanim International (Kuwait);
• Sumitomo Corporation (Japan);
• Tenaga Nasional Berhad (Malaysia);
• National Industries Group (Kuwait);
• Privatisation Holding Company (Kuwait);
• International Power-GDF Suez (UK-France), Korea Electric Power Corporation, AH Sagar & Brother Group (Kuwait);
• Mitsui & Company (Japan), Kharafi Group (Kuwait), Ahmadiah Trading & Contracting Company (Kuwait);
• Combined Group Contracting Company (Kuwait);
• National Bank of Kuwait (Kuwait);
• United Industries Group (Kuwait);
• Noor Investment Company (Kuwait); and
• KGL Logistics Company (Kuwait).

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Please see graphic below

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Land area

17,818 sq km, including 2,590 sq km in the Neutral Zone, sovereignty over which is shared by Saudi Arabia and Kuwait

Population

3.44m, comprising about 1.09m Kuwaitis and 2.35m expatriates (end-2008)

Main towns

The country is divided into five governorates. The Public Authority for Civil Information listed the following population breakdown at end-2007:

Kuwait City (capital): 499,269

Farwaniya: 913,692

Hawalli: 714,876

Ahmadi: 637,411

Jahra: 412,053

Mubarak al-Kabeer: 210,599

Climate

Hot for most of the year and generally dry

Weather in Kuwait City

Hottest months, June to September, 28-50°C (average daily minimum and maximum); coolest months, December to February, 8-18°C; rainfall erratic

Languages

Arabic; English is widely spoken and is the official second language

Weights and measures

Metric system and regional measures

Fiscal year

April 1st-March 31st

Currency

Kuwaiti dinar (KD) = 1,000 fils

Time

3 hours ahead of GMT

Public holidays

Since September 2007 Kuwait has had a Friday-Saturday weekend. Secular holidays include New Year's Day (January 1st), National Day (February 25th) and Liberation Day (February 26th). All Islamic holidays are observed in accordance with the lunar calendar. This may mean that the following dates are approximate: Mawlid al-Nabi (the birthday of the Prophet, February 15th 2011); Eid al-Fitr (end of Ramadan, August 30th); Eid al-Adha (Feast of the Sacrifice, November 6th); Islamic New Year (November 26th)

Official name

State of Kuwait

Form of state

Constitutional emirate

Head of state

The emir, chosen from the Al Sabah family. Currently Sheikh Sabah al-Ahmed al-Jabr al-Sabah, who acceded in February 2006

Legal system

Based on the constitution of 1962, as amended or suspended by emiri decree

Legislature

Unicameral National Assembly of 50 elected members plus 15 cabinet ministers. The assembly has been dissolved five times by emiri decree, most recently in March 2009

National elections

The next election is scheduled for May 2013 (previous election May 16th 2009)

Political groupings

Political parties are not allowed, but there are various groupings: the Sunni Islamist Islamic Salafi Alliance and Islamic Constitutional Movement (Muslim Brotherhood); the Shia Islamist National Islamic Alliance and Justice and Peace Alliance; and secular groupings such as the centrist Popular Action Bloc and the liberal National Democratic Alliance. Most MPs sit as independents, and many are loyal primarily to tribal interests

Executive

Power is exercised by the emir through a Council of Ministers (cabinet) headed by a prime minister chosen by the emir. The cabinet resigned on March 31st and a new one is expected to take office in May.

Council of Ministers

Crown prince: Sheikh Nawaf al-Ahmed al-Jabr al-Sabah

Prime minister: Sheikh Nasser Mohammed al-Ahmed al-Sabah

Deputy prime minister & defence minister: Sheikh Jabr al-Mubarak al-Hamad al-Sabah

Deputy prime minister & foreign minister: Sheikh Mohammed Sabah al-Salem al-Sabah

Deputy prime minister for economic affairs: Sheikh Ahmed Fahad al-Sabah

Minister of state for cabinet affairs: Roudhan al-Roudhan

Key ministers

Commerce & industry: Ahmed al-Haroon

Communications: Mohammed al-Baseeri

Education & higher education: Mudhi al-Humoud

Electricity & water: Badr al-Shuraian

Finance: Mustafa al-Shamali

Health: Helal al-Sayer

Interior: Sheikh Ahmed al-Hamoud al-Sabah

Justice, awqaf & Islamic affairs: Rashed Hammad

Oil & information: Sheikh Ahmed Abdullah al-Sabah

Public works & municipal affairs: Fadhil Safar

Social affairs & labour: Mohammed al-Afasai

National Assembly speaker

Jassem al-Khorafi

Head of emiri diwan

Sheikh Nasser Sabah al-Ahmed al-Sabah

Central Bank governor

Sheikh Salem Abdel-Aziz al-Sabah