IMF makes recommendations to Kuwait - Gulf News

"To boost non-oil revenues, several directors [of the IMF] recommended tax reforms in the context of the planned GCC union, including the eventual introduction of a value added tax," it said in its latest prescription on Kuwait.

The IMF supported Kuwait's intention to keep the exchange rate peg unchanged until the GCC monetary union is established, and to remain open to the choice of the exchange rate regime under the planned monetary union.
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It urged Kuwait to speed up a privatisation law and amendment to a tax law awaiting parliamentary approval. The IMF also wanted a broadening of private sector participation in public sector dominated activities.
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Generating employment for the fast growing Kuwaiti labour force, however, remains the most important economic challenge for Kuwait, the IMF said. It supported the country's labour market reform strategy aimed at training and providing incentives for development of skills needed by the private sector. However, it urged the authorities to continue applying the Kuwaitisation policy flexibly so that competitiveness and profitability of the private sector were not adversely affected.

I don't understand why the IMF wants the GCC to introduce a VAT. It would make sense if the governments needed a source of income, but most don't given government ownership of oil.