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Kuwait to pass 20 billion dinar borrowing law, over 50 years

Kuwait poised to pass a law allowing 20 billion dinars in borrowing over 50 years to fund development projects and address deficits, with a potential increase in the debt ceiling.

  • The law will enable Kuwait to issue debt instruments for the first time in 8 years.

  • Kuwait will turn to international markets to finance major development projects and bridge the deficit if needed.

In confirmation of a report by Al-Rai on January 8, titled “Public debt on track for approval…government authorized to borrow 20 billion dinars over 50 years,” Bloomberg, citing reliable sources, stated that Kuwait is set to pass a new law permitting it to raise 20 billion dinars, roughly $64.85 billion, through debt instruments over a 50-year period.

According to Bloomberg, the sources revealed that the anticipated new law will enable Kuwait to issue debt instruments for the first time in 8 years. The law will also authorize the country to issue bonds and sukuk. Additionally, the debt ceiling outlined in the proposed law could be increased in the final draft, with previous suggestions raising it to 30 billion dinars.

The agency cited sources stating that Kuwait will only turn to bond markets when deemed necessary.

Kuwait’s last bond issuance, totaling $8 billion, took place in March 2017, just before the previous debt law expired. These bonds remain the only outstanding bonds, trading at a yield of approximately 4.9%, one of the lowest among emerging-market countries. Bloomberg also noted that the Finance Ministry did not respond to a request for comment.

In a related context, the agency highlighted that the absence of a draft public debt law in Kuwait, delayed for years due to political disputes, has prevented successive governments from borrowing. As a result, they have had to rely on the General Reserve Fund or the Treasury. The agency added that Kuwait will turn to international markets primarily to finance major development projects and, if necessary, to help bridge any financial deficit.

Source: Al Rai



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