New Kuwaiti debt law enacted
Fiscal flexibility improved
Kuwait is reportedly preparing to issue conventional and Islamic bonds worth around KD2 billion ($6.6 billion) to shore up its 2025-2026 budget deficit.
Around KD500 million worth of bonds and sukuk will target local banks and the rest will be issued in Asia and other global markets.
The Central Bank of Kuwait (CBK) contacted local banks last week for possible subscription in the imminent issuance, local newspapers in Kuwait said.
The funds would be borrowed during the 2025-2026 fiscal year, which started on April 1, following the government’s decision to revive the debt law after an eight-year suspension, according to the Arabic language dailies Al-Seyassah and Al-Qabas.
“CBK has contacted banks in Kuwait to ask them to express a desire to subscribe to the planned bonds, which include conventional bonds and Murabaha bonds…the bonds targeting the local market have a value of KD500 million,” Al-Seyassah said.
The report did not make clear if the bonds would be issued in one tranche or provide a date for the planned issuance, which coincides with a major escalation in the Israeli-Iran conflict following the US bombing of Iran’s nuclear facilities on Sunday.
Kuwait and other Gulf oil producers have been tense given their proximity to the hostilities. Last week, Kuwait’s bourse declined by around KD1.2 billion, nearly 2.5 percent of its market capitalisation.
Kuwaiti Finance Minister Noura Al-Fassam said last month the new debt law, which was approved by Kuwait’s Emir in March, represents a major turning point. It establishes the largest integrated legal framework in Kuwait’s history for managing public debt, including maturities extending up to 50 years and a borrowing ceiling of KD30 billion.
She said borrowing would be managed by representatives from the Ministry of Finance, the Central Bank and the Kuwait Investment Authority, the country’s sovereign wealth fund, which manages more than $1 trillion in assets.
Kuwait has forecast a deficit of around KD6.3 billion in its 2025-2026 fiscal year.
The shortfall was based on an oil price of around $68 a barrel and a projected increase in non-oil revenues with the enforcement of new taxes.
