Money & costs
During the late 1970s Kuwait’s stock exchange (the first in the Gulf) was among the top 10 in the world, but a decade later the price of oil collapsed together with a not-entirely-legal parallel financial market, leaving hundreds of people bankrupt. The scandal left behind US$90 billion in worthless post-dated cheques and a mess that the Kuwaiti government is still trying to sort out. The mid-1980s brought further trouble to the economy as tensions with Iran (including the highly publicised bombings of the US and French embassies) scared away foreign investors. The invasion of the 1990s was an unmitigated financial disaster and the country is still paying back its military debts, while trying not to count the cost of rebuilding the country. As such, it is remarkable to see how spectacularly the economy has bounced back since the turn of the 21st century.
With the country home to 10% of the world’s oil reserves, oil and oil-related products naturally dominate the economy and, with more than 100 years’ worth of remaining oil, the need to diversify has not been as urgent as it has been in neighbouring countries. Nonetheless, the economy is also buoyed by vibrant banking and commercial sectors, and the encouragement of overseas investment. In addition, Shuwaikh Port still boasts the largest cargo fleet in the Arab world. Tourism is a negligible part of the economy.
The government established a free trade zone in 1998 to offer a combination of incentives to investors, including tax-free personal or corporate income, monetary restrictions and, joy oh joy, minimal bureaucracy.
Moneychangers are dotted around the city centre and main souqs, and change all major and regional currencies. Only banks and the larger money-exchange facilities will change travellers cheques. Since the dinar has been pegged to the dollar, there’s little difference between exchange rates from place to place.
Since 2003, the Kuwaiti dinar has been pegged to the US dollar.