The Kuwaiti government is preparing to borrow up to $20 billion over the next 12 months as part of a renewed effort to finance budget deficits and advance long-delayed fiscal reforms, according to senior finance officials.
The move signals a shift in strategy for the oil-rich Gulf state, which has traditionally relied on oil revenues and its sovereign wealth fund to support public spending. But with persistent budget shortfalls and stalled economic diversification efforts, officials say external and domestic borrowing will be essential to maintain financial stability.
“This is a prudent approach to ensure liquidity while reforms are implemented,” a senior official at the Ministry of Finance told local media. “Borrowing will allow us to meet our immediate obligations without depleting strategic reserves.”
The borrowing plan includes both local bond issuances and potential international debt sales, subject to market conditions. Analysts expect Kuwait to tap global capital markets later this year, given favorable borrowing costs and investor appetite for Gulf debt.
Kuwait’s fiscal challenges have intensified in recent years due to fluctuating oil prices, rising public sector wage bills, and political gridlock that has slowed the passage of key economic legislation—including a debt law that would formally authorize long-term borrowing. Parliament is expected to revisit the proposed debt legislation in the coming weeks.
Despite being home to one of the world’s largest sovereign wealth funds—the Kuwait Investment Authority (KIA), which manages assets exceeding $800 billion—restrictions on tapping certain reserves have complicated short-term financing.
Economic experts say Kuwait’s move to re-enter the debt market is a necessary, though overdue, step. “This could mark the beginning of a more sustainable fiscal policy if paired with meaningful reform,” said economist Dr. Salma Al-Fahad. “But borrowing alone won’t solve the underlying structural issues.”
Rating agencies and investors will be watching closely for signs of political consensus on broader economic reforms, including subsidy restructuring and public sector efficiency.
Kuwait’s last major international bond issuance was in 2017. If the current plan proceeds, it would represent one of the country’s most significant borrowing drives to date.
