ByTsvetana Paraskova– Mar 28, 2025, 7:30 AM CDT
Kuwait has approved a financing and liquidity law that will allow one of OPEC’s top producers to return to the debt market after eight years, with borrowing expected to fund projects to diversify its dependence on oil revenues.
While the other OPEC Gulf heavyweights, Saudi Arabia and the United Arab Emirates (UAE) are investing – and borrowing to invest – in major infrastructure, AI, and technology projects, Kuwait has been lagging behind.
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Over the past few years, Kuwait – OPEC’s fourth-largest exporter behind Saudi Arabia, Iraq, and UAE – has been more vulnerable to oil price slumps than its fellow Gulf producers as it hasn’t been able to borrow since 2017.
Kuwait’s economy remains in recession due to OPEC+ production cuts, the International Monetary Fund (IMF) said in December 2024.
“The economy is highly exposed to a variety of global risks through its oil dependence, in particular to commodity price volatility, a global growth slowdown or acceleration, and the intensification of regional conflicts,” the IMF said.
Now the newly adopted law to regulate public borrowing is expected to boost spending in projects in the non-oil sector.
The financing and liquidity law allows Kuwait to issue up to $97.3 billion (30 billion Kuwaiti dinars) in total in debt instruments in local or major foreign currencies, with debt maturities of up to 50 years.
“This marks a crucial step in ongoing financial and economic reforms aimed at building a more diversified and sustainable economy that benefits both the state and its citizens,” Noura Al-Fassam, Minister of Finance and Minister of State for Economic Affairs and Investment, said in a statement carried by Kuwait Times.
Shaikh Nawaf S. Al-Sabah, a member of the royal family and CEO of Kuwait Petroleum Corporation, told the Financial Times that a heavily oil-dominated revenue wouldn’t spell a “sustainable future” for Kuwait.
“The state budget will have to find different sources of revenue than oil,” the executive told FT days before the liquidity and debt law was passed.
By Tsvetana Paraskova for Oilprice.com
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