Kuwait’s Cabinet has approved a draft law enabling public debt issuance for the first time in eight years, potentially raising up to 30 billion dinars. The move aims to fund development projects and address fiscal deficits, as prior political impasses had stalled borrowing. Experts express cautious optimism about the government’s renewed focus on economic reform and investment.
The Council of Ministers in Kuwait has sanctioned a draft decree facilitating the issuance of public debt for the first time in eight years. This pivotal law, termed “financing and liquidity,” was introduced by Finance Minister Noura Al-Fassam and now awaits the approval of Emir Sheikh Mishaal Al-Ahmed Al-Sabah. Specific details on the decree remain unspecified.
Originally, the draft law aimed to permit the raising of up to 20 billion dinars (approximately $65 billion) over a fifty-year period. However, sources suggest that the final version might increase this cap to 30 billion dinars. Political analyst Bader Al Saif expressed optimism, noting, “Better late than never.” He emphasized that Kuwait holds immense potential that could diminish without decisive action.
The absence of this public debt law has hindered the government’s ability to borrow, resulting in reliance on the General Reserve Fund. The anticipated bond sales will primarily support key development initiatives and address fiscal deficits. Kuwait is recognized as a significant US ally, with a substantial sovereign wealth fund valued around $1 trillion.
The last instance of bond issuance occurred in March 2017, involving an $8 billion deal shortly before the preceding debt law lapsed. Following a four-year suspension of parliament, the Al-Sabah family-led government aims to enact vital bills to stimulate the economy, which has faced political challenges that have deterred investment and fiscal reforms.
Upon implementation, the new law is expected to enable Kuwait to issue both traditional bonds and Islamic Sukuk. Analysts predict that Kuwait will utilize bond markets judiciously as needed. Al-Saif remarked on the government’s initiatives, stating they are “not only taking the right decisions fairly quickly but communicating these decisions in the most bombastic way.”
The approval of the draft debt law by the Kuwaiti Cabinet marks a significant step in reviving the nation’s ability to issue bonds after eight years. This could lead to critical funding for development projects and support fiscal stability. Despite past political struggles that stifled progress, the new legislation indicates a favorable shift towards economic diversification and reform.
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