Kuwait amends Future Generations Reserve law, sets strict borrowing limits
Kuwait has issued Decree-Law No. 81 of 2026 amending provisions of Decree-Law No. 106 of 1976 governing the Future Generations Reserve, introducing a regulated mechanism for borrowing from the reserve to support the State’s General Reserve while protecting its assets.
The explanatory memorandum, published in a supplement to the official gazette Kuwait Today, said the amendments seek to strengthen the legal and institutional protection of the Future Generations Reserve, which was established as a strategic savings mechanism to preserve part of the country’s wealth for future generations.
The decree allows borrowing from the Future Generations Reserve only as an exception and subject to approval by the Council of Ministers and the Board of Directors of the Kuwait Investment Authority, along with specific conditions governing the amount, purpose, repayment period and returns of each loan.
Borrowing subject to two key limits
Under the new provisions, total borrowing during a single fiscal year may not exceed 100 percent of the reserve’s average returns over the previous five audited fiscal years. The total accumulated outstanding loan balance may not exceed 10 percent of the net value of the reserve’s assets, based on its audited financial statements for the previous fiscal year.
No new loans may be contracted if either ceiling is exceeded. Borrowing can resume only after the relevant borrowing ratio falls back within the prescribed limits.
The decree requires the principal amount of each loan, along with its returns, to be recorded as an asset owed to the Future Generations Reserve. The loan will have priority for repayment from state revenues when a surplus is recorded in the General Budget Account following approval of the state’s final account. It may not be written off or reduced except through a law issued specifically for that purpose.
Any borrowing decision must specify the loan amount, its purpose and return, the repayment period and schedule, conditions for restructuring or rescheduling repayments, and any other provisions required to regulate and implement the loan.
Kuwait Investment Authority to manage reserve funds
The amendments also reaffirm the Kuwait Investment Authority’s responsibility for managing and investing the Future Generations Reserve funds. The authority may use the necessary financial, investment and financing instruments to manage the funds in accordance with technical standards, with investment returns added to the Future Generations Account.
The decree also changes the wording of the provision governing annual allocations to the reserve. Where state revenues exceed expenditures, a percentage of the actual surplus in the state’s final accounts will be deducted annually based on a proposal by the minister responsible for chairing the Kuwait Investment Authority’s Board of Directors and with Cabinet approval.
The explanatory memorandum said the amendments seek to balance the state’s present financial needs with the protection of the wealth and rights of future generations, while ensuring that the reserve’s capital is preserved and its assets continue to grow over the long term.
