Kuwait plans to issue between four and five billion dinars ($13 to $16 billion) in public debt by the end of the fiscal year ending March 2021 if parliament approves a long-debated debt law, a government document seen by Reuters showed.
A parliamentary committee is due to vote on the law, which would allow Kuwait to tap international debt markets, on Sunday ahead of putting it to the elected assembly for approval.
Kuwait has been scrambling to boost state coffers badly hit by the coronavirus crisis and low crude prices, rapidly depleting its General Reserve Fund (GRF) to plug a budget deficit.
Legislators have been requesting more visibility from the state about use of the funds and repayment mechanisms given the government’s heavy reliance on oil income.
“The government will face a real crisis in everything if the debt law is not passed,” Reuters quoted a government official as saying.
The law, which a parliamentary committee discussed last week, would allow it to borrow 20 billion dinars ($65 billion) over 30 years.
Other Gulf states have tapped international markets over the past few years, and the region saw more issuances when oil prices crashed earlier this year as the pandemic hit global demand.
According to the document, even with parliamentary approval, Kuwait could need three to four months to prepare a debt sale.
Kuwait has already depleted the cash in its GRF, the document showed. The International Monetary Fund (IMF) estimates the deficit could reach more than 11 percent of gross domestic product this year, compared with a 4.8 percent surplus last year.
The finance ministry also proposed selling 2.2 billion dinars of the GRF’s assets to Kuwait’s other - much larger - sovereign fund, the Future Generations Fund or borrowing from the central bank to boost state finances, the document read.
“The government looks forward to the legislative authority’s cooperation,” Finance Minister Barak al-Sheatan said in the statement issued after S&P Global Ratings on Friday revised Kuwait’s outlook to “negative” from “stable”.
The document said the cabinet approved a slate of reforms aimed at diversifying state revenues away from oil, but it did not specify them.
Lawmaker Riyadh al-Adsani had tweeted that reforms include introducing value-added tax and excise taxes, a tax on net profits of private businesses, reforming the wage structure in the bloated public sector, slashing some benefits and raising utility prices.
