Kuwait’s 2025 return to Global Debt Markets marks strategic financial shift
Revived debt law opens new investment opportunities, particularly in sovereign bonds offering attractive yields, supported by low debt and high reserves; equities, especially in financial and infrastructure sectors benefiting from state projects and risk management, with a focus on fiscal discipline and regional stability.
Kuwait’s re-entry into the global debt markets in 2025 marks a major step in its financial strategy, according to a recent analysis by AINVEST. The upcoming bond issuance, including both conventional and Islamic instruments, is intended to address a projected fiscal deficit of $20.7 billion, largely driven by cautious oil price forecasts and increased non-oil revenue collection.
The issuance is made possible by the revival of the Public Debt Law, passed in March 2025, which authorizes borrowing of up to $100 billion with maturities reaching 50 years. The debt program is overseen by the Ministry of Finance, the Central Bank of Kuwait, and the Kuwait Investment Authority (KIA), reports Al-Rai daily.
Kuwait’s strong credit profile supports this move, underpinned by low public debt, robust foreign currency reserves, and over $1 trillion in sovereign assets managed by KIA. These factors are expected to attract interest from both local and global investors, with Asian markets highlighted as a priority.
The report also highlights structural reforms aimed at aligning Kuwait’s capital markets with international standards and enhancing investor confidence.
These include the Central Broker Service to minimize settlement risk through centralized clearing; Kuwait Automated Settlement System for Inter-Participant Payments (KASSIP) to enable real-time settlement of cash transactions; Qualified Mediator Model to ensure high professional standards in brokerage and IT infrastructure upgrades to prepare for future listings of ETFs and fixed-income instruments.
These reforms are part of the third phase of the Kuwaiti market development program, jointly led by the Capital Markets Authority and Boursa Kuwait. The objectives are to deepen liquidity, increase transparency, and attract foreign institutional investment.
The 2025–2026 budget earmarks $6 billion for major infrastructure projects, including development of railway networks, completion of Mubarak Al-Kabeer Port and construction of two new football stadiums.
These investments are designed to strengthen non-oil GDP, enhance logistics, and support tourism, all of which contribute to Kuwait’s economic diversification strategy.
Additional policy reforms include the privatization of the Kuwait Stock Exchange in 2019, which led to its emerging market upgrade by MSCI and FTSE, and the new mortgage law, which opens the retail lending sector to commercial banks. This law could potentially unlock up to $41 billion in lending, benefiting both real estate and banking sectors.
Kuwait’s banking sector remains strong, with 2023 seeing net profit growth of 46.7%, a capital adequacy ratio of 18.3%, and non-performing loans reduced to 1.7%. The merger of Kuwait Finance House and Ahli United Bank created one of the world’s largest Islamic banks, boosting Kuwait’s regional and global financial standing.
However, challenges remain. The persistent budget deficit, driven by high government spending on wages and subsidies (75% of the budget), continues to strain public finances. Additional risks include delays in executing infrastructure projects and geopolitical instability in the region.
AINVEST concludes that the revived debt law opens new investment opportunities, particularly in sovereign bonds offering attractive yields, supported by low debt and high reserves; equities, especially in financial and infrastructure sectors benefiting from state projects and risk management, with a focus on fiscal discipline and regional stability.
