Text size:

  • Small
  • Normal
  • Large
Sheikh Salem Abdulaziz Al Sabah, the governor of Kuwait's central bank.
Sheikh Salem Abdulaziz Al Sabah, the governor of Kuwait's central bank.

Long-serving Kuwait central bank chief resigns

Kuwait's central bank governor stepped down yesterday in protest at the government's big spending rises.

Kuwait's central bank governor resigned yesterday in protest at what he views as the country's spendthrift policies.

Sheikh Salem Abdulaziz Al Sabbah, who spent more than 25 years at the helm of the regulator, said "unprecedented" increases in public spending meant the regulator was no longer able to meet its responsibilities.

"The challenge of current local economic conditions and forecast growth in public expenditure has reached a point where it would prevent the [central bank] from carrying out its duties as stated in the bill of its establishment," he was quoted as saying in an interview with the Kuwait News Agency (Kuna).

Despite receiving support for his efforts, government action had yet to be taken to steer monetary policy towards economic reform, the news agency quoted him as saying.

Sheikh Salem's departure follows a series of huge public-sector pay rises after workers staged strikes and protests last year. Kuwait's government plans to raise spending by 11 per cent in the fiscal year ending next month to a record 19.44 billion dinars (Dh257.46bn).

The spending increase raised risks for the economy, even if the outlay was underpinned by temporarily high oil prices, Kuna reported Sheikh Salem as saying.

Sheikh Salem and other leading Kuwaiti economic policymakers had been urging the government to restrain spending as oil prices rose last year.

But their pleas were drowned out by political turmoil and accusations of corruption against senior politicians.

"Kuwait's policymaking environment is more problematic than any of the other Gulf states, and the governor's departure is unlikely to lead to a significant shift in policymaking," said Simon Williams, the chief economist of HSBC in the Middle East and North Africa.

Sheikh Salem had earned a reputation as a reformer during his leadership. He was behind Kuwait's decision in 2007 to become the first GCC state to abandon the US-dollar peg in an effort to fight inflation. Instead, the Kuwaiti dinar is pegged to a basket of currencies, believed to be heavily weighted in dollars.

Sheikh Salem is the second GCC central bank governor to leave his post in recent months. In December, Muhammad Al Jasser left his post at the helm of Saudi Arabia's central bank to become minister of economy.

 

tarnold@thenational.ae

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 A sign points the way to an outdoor market popular with German visitors on the Polish side of the German-Polish border. Sean Gallup / Getty Images

In pictures: A decade since the European Union went east

May 1 will mark 10 years since the European Union expanded east, taking in countries like Poland, the Czech Republic and the Baltic states as new members. And though the border region between Germany and Poland is flourishing with trade and cultural exchange, the open border has also brought a sharp rise in crime.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National