Kuwait among least indebted Arab nations despite rising public debt forecast

ranks among the least indebted Arab countries, with a public debt-to-GDP ratio of just 3.04 percent. However, the International Monetary Fund (IMF) anticipates this figure will rise to 7.35 percent by the end of 2025.

Due to mounting fiscal pressures, Kuwait has increasingly relied on the General Reserve Fund to finance its budget deficits. With the fund’s resources dwindling, the government last year sold some of its assets to the Future Generations Fund, which is managed by the Kuwait Investment Authority (KIA) according to Asharq Al-Awsat News Agency.

In a significant fiscal development, Kuwait is preparing to raise up to $6 billion from international debt markets through a dollar-denominated bond issuance.

This move follows the passage of a long-awaited public debt law in March 2025, which for the first time since 2017 allows the country to issue sovereign bonds internationally. The law sets a debt ceiling of 30 billion Kuwaiti dinars (approximately $98 billion) over a 50-year horizon.

The public debt-to-GDP ratio is a key indicator used by financial and economic authorities to gauge a country’s capacity to manage and repay its debts. Among Arab countries, public debt levels vary widely depending on spending requirements and financial resources such as taxes, fees, exports, and tourism revenues.

Comparatively, Saudi Arabia has the second-lowest debt ratio in the Arab world after Kuwait, at 29.9 percent, projected to increase to 34.85 percent in 2025, according to the IMF’s World Economic Outlook released in April.

The Kingdom began external borrowing in 2016 to fund budget shortfalls and major Vision 2030 projects. However, high oil revenues—accounting for 60.1 percent of actual revenues in 2024—combined with increased private sector activity and fiscal discipline have helped contain debt levels.

The United Arab Emirates (UAE) ranks third, with a public debt-to-GDP ratio of 32.1 percent in 2024, expected to slightly increase to 32.8 percent this year. The UAE’s strong fiscal standing is supported by its status as a global hub for trade and investment, a projected 7.1 percent budget surplus in 2024, and net foreign assets estimated at 157 percent of GDP, according to a June 24 report by Fitch Ratings. The agency affirmed the UAE’s credit rating at ‘AA-’ with a stable outlook.

Despite upcoming borrowing plans, Kuwait’s relatively low debt ratio continues to reflect its strong financial fundamentals and substantial sovereign wealth managed by the KIA.