Kuwait Owes Two Billion Dinars In Bonds

Kuwait would need two billion dinars in liquidity from now until June 2027 to repay foreign and domestic bonds issued to fund the budget deficit, after the government paid one billion dinars on March 20 out of total debt of three billion dinars resulting from the issuance of bonds.

Due to a lack of liquidity in the General Reserve Fund, the administration will have to rush the National Assembly to pass the Public Debt Law once more to fund the settlement of the debts, according to a local Arabic daily.

Minister of Finance and Minister of State for Economic Affairs and Investment Abdulwahab Al-Rasheed announced that the government has issued 2.4 billion dinars in foreign bonds and 600 million dinars in local bonds.

"Issuing bonds requires legislation from the National Assembly in accordance with Article 136 of the Constitution, and the bonds that were issued were all done in accordance with Law No. 50 of 1987 and its amendments issued in the matter of authorizing the government to contract general loan," Al-Rasheed explained in his response to MP Abdullah Al-question, Tariji's a copy of which was obtained by the daily.

He indicated that the General Reserve Fund will be used to fund the repayment of bonds if the necessary liquidity is not available, or the issuing of public debt (re-issue) will be used to finance the repayment of the amounts due, thereby providing the necessary general liquidity.

Due to the financial conditions that the country encountered in the year of issuance (2016-2017), which included a decline in the cash balance and the general budget's vulnerability, Al-Rasheed said it was necessary to issue these bonds to cover the general budget deficit. The availability of acceptable levels of liquidity in the local banking system, the low cost of external borrowing, and the stability of the State of Kuwait's creditworthiness at the time made this the most appropriate strategy for covering the budget deficit.

"The bond funds were directed to the General Reserve Fund during that period to help to fund part of the public budget deficit," he continued. Al-Rasheed stated that the proposed strategies to address public budget imbalances are part of the government's work program for the sixteenth legislative term (2021/ 2022 – 2024 / 2025), which is based on four main pillars.

The following are the primary pillars of the government's first axis of work, dubbed "Implementation of the Economic and Financial Reform Program":

1. Building a better corporate environment

2 - Assisting the private sector's expansion

3 – Changes in the work market

4 – The public finances' long-term viability

The second axis of public sector restructuring is focused on improving the administrative structure of the government machinery, as well as increasing integrity and eliminating corruption.

Human capital development is the third axis, which aims to reform education, improve health care, and empower youth, women, and people with disabilities.

By enhancing infrastructure management efficiency and building a sustainable energy system to address the challenge of global energy changes, the fourth axis focuses on strengthening infrastructure and employing renewable energy.

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