Kuwait passes borrowing law to rejoin global debt markets after 8 years

27/03/2025 06:41 AST

Kuwait is set to return to international debt markets after an eight-year absence, following the approval of a long-awaited public borrowing law aimed at addressing fiscal pressures and financing infrastructure projects.

According to the Ministry of Finance, the law allows the government to issue up to 30 billion Kuwaiti dinars ($98 billion) in debt instruments, either in local or major foreign currencies, with maturities of up to 50 years - the longest-term legal framework the country has ever established for managing public debt.

Since its debt law expired in 2017, Kuwait has been unable to issue sovereign bonds. Fitch Ratings noted earlier this month that passing the financing and liquidity law will boost fiscal flexibility, although the government has so far met its financing needs through substantial assets.

Finance Minister and Minister of State for Economic Affairs and Investment, Noura Suleiman Salem Al-Fassam, said the law marks a strategic shift that will enhance Kuwait's ability to meet financial obligations and support long-term growth.

"This law gives Kuwait greater financial flexibility by providing the option to access both local and global financial markets to enhance liquidity management. This law supports government efforts to strengthen financial stability and drive economic development in line with Kuwait Vision 2035," she added.

The law is expected to stabilize liquidity, reduce borrowing costs, and strengthen Kuwait's debt management strategy.

Faisal Al-Muzaini, director of public debt at the Ministry of Finance, said it would introduce multiple financial instruments, allowing the state to secure financing through bonds, sukuk, or other market tools.

"Developing the local debt markets enhances Kuwait's competitiveness as a regional financial center and provides the government with new financial tools to manage public finances efficiently," Al-Muzaini added.

The law addresses a long-standing challenge in financing major infrastructure and development projects. It is also expected to stimulate liquidity and encourage greater private sector participation in financing activities.

The ministry emphasized that this legislative step underscores Kuwait's commitment to sustainable fiscal policy, balancing development financing with debt sustainability.

The government also expects the law to improve Kuwait's sovereign credit profile and enhance financial stability by ensuring liquidity under varying economic conditions.

Kuwait's budget for the next fiscal year, which runs from April 1, 2025, to March 31, 2026, projects a $22.44 billion deficit, with $59.10 billion in revenue and $79.54 billion in expenditure.