Overview
Oman and Kuwait both face the imperative of economic reform to reduce oil dependence, but their political structures produce very different reform dynamics. Oman’s centralised governance has enabled faster policy implementation, while Kuwait’s parliamentary system has often stalled reform efforts.
Oman’s Reform Agenda
Oman has implemented a series of structural reforms since 2020, including the introduction of VAT, subsidy rationalisation, public debt management, and labour market restructuring through Omanisation. The Medium-Term Fiscal Plan has improved Oman’s credit ratings, and the Sultanate’s governance model allows for decisive policy action when needed.
Kuwait’s Reform Agenda
Kuwait has the GCC’s largest sovereign wealth fund relative to GDP but has struggled to implement reforms. Parliamentary opposition has blocked VAT introduction, delayed subsidy cuts, and hindered privatisation efforts. Kuwait’s fiscal breakeven oil price remains high, and the country has not passed a debt law despite years of discussion.
Key Differences
The fundamental difference is governance structure. Oman’s system allows top-down reform implementation, whereas Kuwait’s elected parliament creates veto points. Kuwait has greater financial reserves but less reform momentum. Oman has moved faster on taxation, labour market reform, and fiscal consolidation despite having fewer resources.
Verdict / Bottom Line
Oman demonstrates that governance capacity matters more than financial reserves for successful reform. Kuwait’s wealth provides a buffer, but without structural economic changes, long-term fiscal sustainability remains at risk. Oman’s reform trajectory offers a more credible path to post-oil readiness.