Kuwait has issued a new law aimed at regulating public borrowing, a long-awaited step as the country prepares to return to global debt markets after an eight-year hiatus.
اضافة اعلان
In a statement on Wednesday, the Ministry of Finance announced that the new law allows "the issuance of financial instruments with maturities up to 50 years... and sets the public debt ceiling at 30 billion Kuwaiti Dinars (97.36 billion USD) or its equivalent in major convertible foreign currencies."
This marks the first such step since 2017 when Kuwait last issued bonds. The approval of the new debt law had been delayed for years due to disputes between the parliament and successive governments, according to Reuters.
This development comes under the leadership of Kuwait's Emir, Sheikh Meshal Al-Ahmad Al-Sabah, who took office in December 2023. Less than two months later, the parliament was dissolved, and economic reforms were placed at the top of his priorities to end the long-standing political stalemate.
Kuwait operates a parliamentary system that grants the legislative authority the right to approve or reject laws, as well as the ability to question ministers and vote on motions of no confidence. While this gives Kuwait a more democratic foundation than other Gulf countries, it has also led to recurring political deadlock.
Commenting on the new law, Monica Malik, Chief Economist at Abu Dhabi Commercial Bank, stated, "This is an important sign of increasing momentum for reform, alongside vital financial development. For investors, this indicates that reforms are finally progressing."
Earlier, Kuwait highlighted the necessity of maintaining stability in government spending to control budget growth.
The state budget is expected to record a deficit of 5.6 billion dinars (18.33 billion USD) for the fiscal year 2024-2025, with estimated expenditures of about 24.5 billion dinars, according to Reuters.
Malik added that "the new debt law will allow for financing diversification, easing pressure on the general reserve fund," noting that the debt will also "support the investment program and will play an important role in the banking sector and credit demand."
Malik predicted that the new mortgage law will be the next reform step in Kuwait.
It is worth mentioning that Kuwait, the fourth-largest oil producer in the Middle East, is the only Gulf country whose currency is not pegged to the US dollar. It has attributed rising inflation to the decline in the value of the US dollar and its impact on import costs.
