Kuwait’s Cabinet has passed a draft law facilitating public debt sales for the first time in eight years. This legislation could raise up to 20 billion dinars (around $65 billion) to support development projects. Political delays had previously hindered such measures, restricting government borrowing. The law will enable the issuance of both conventional bonds and Islamic Sukuk.
Kuwait’s Council of Ministers has approved a draft decree that will enable the Gulf state to sell debt for the first time in eight years. This decision pertains to a public debt bill, detailed in a statement following a recent cabinet meeting. The proposal, presented by Finance Minister Noura Al-Fassam, awaits approval from Emir Sheikh Mishaal Al-Ahmed Al-Sabah.
The original plan suggested Kuwait could raise up to 20 billion dinars (approximately $65 billion) over a span of 50 years, with potential adjustments permitting a cap of 30 billion dinars. “Better late than never,” remarked Bader Al Saif, an academic at Kuwait University, emphasizing the country’s significant but hitherto unrealized potential.
Kuwait has faced challenges with political gridlocks delaying the public debt legislation, restricting government borrowing and forcing reliance on the General Reserve Fund. The issuance of bonds is aimed at funding crucial development projects and addressing fiscal deficits.
As one of the largest oil exporters globally with a sovereign wealth fund nearing $1 trillion, Kuwait’s last market issuance took place in March 2017, prior to the expiration of the previous debt law. Political instability has hindered progress, restricting foreign investment and fiscal reforms necessary for diversifying the economy.
Upon enactment, the law will facilitate the issuance of conventional bonds and Islamic Sukuk, with plans for market engagement only when essential. Al-Saif noted that Kuwait is making rapid, public decisions to showcase its resurgence on the geopolitical stage.
The approval of Kuwait’s debt law signifies a pivotal change, enabling the nation to address its fiscal challenges through bond sales. This development, after years of political obstruction, opens avenues for investment and economic diversification. With implications for both domestic funding and international market participation, this legislation embodies a step forward in Kuwait’s financial strategy and governance.
Original Source: www.livemint.com
