Kuwait Cabinet Approves Debt Law, Signals Return to Bond Market

Kuwait’s Cabinet approved a draft public debt law allowing bond sales for the first time since 2017. The law, presented by Finance Minister Noura Al-Fassam, could enable the country to raise up to 20 billion dinars. This comes after years of political dysfunction and aims to boost investment and development in the nation while addressing fiscal deficits.

Kuwait’s Council of Ministers has approved a draft decree that allows the country to sell public debt for the first time in eight years. This approval, which follows a meeting on Thursday, concerns the proposed public debt law related to financing and liquidity, although specific details remain undisclosed.
The decree presented by Finance Minister Noura Al-Fassam is awaiting the approval of Emir Sheikh Mishaal Al-Ahmed Al-Sabah, who must authorize all new laws. The initial draft allows for the raising of up to 20 billion dinars (approximately $65 billion) over a span of 50 years, with discussions suggesting the cap could be increased to 30 billion dinars.
Bader Al Saif, an assistant professor at Kuwait University, remarked, “Better late than never. Kuwait’s potential is real and immense. But in the absence of a bold and urgent set of actions, the country’s potential will soon dissipate.” The absence of a public debt law has hindered previous governments, forcing reliance on the General Reserve Fund.
Kuwait is looking to international markets to fund significant development projects and address any fiscal deficits. As a key U.S. ally and a major oil exporter, Kuwait has a sovereign wealth fund valuing approximately $1 trillion. Its last bond issuance occurred in March 2017, shortly before the previous debt law’s expiration.
The suspension of parliament for four years by Kuwait’s ruler has facilitated the government to pass crucial legislation. Political dysfunction had previously impeded development and foreign investment, as well as efforts toward fiscal reform and economic diversification.
Once enacted, the new law will enable Kuwait to issue conventional bonds and Islamic Sukuk, allowing access to bond markets strictly when necessary. Al Saif commented on the rapid decision-making, stating that Kuwait aims to demonstrate its re-emergence on the economic stage effectively.

The approval of the public debt law by the Kuwait Cabinet marks a significant milestone for the Gulf nation, facilitating its entry into the bond market. With the potential to raise substantial funds while addressing fiscal deficits, conducive legislative changes are anticipated to stimulate development and investment. Despite past political uncertainties, the Emir’s endorsement could signal a new era aimed at economic diversification and stability for Kuwait.

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