Kuwait to launch for­eign bond sale to fi­nance deficit

Coun­try’s first for­eign debt in around two decades

Kuwait Times - - FRONT PAGE -

KUWAIT: Kuwait will is­sue bil­lions of dol­lars worth of bonds in in­ter­na­tional mar­kets to fi­nance a bud­get deficit re­sult­ing from low oil prices, a re­port said yes­ter­day. Fi­nance Min­is­ter Anas Al-Saleh said Kuwait will is­sue US dol­lar-de­nom­i­nated sov­er­eign bonds of up to $9.6 bil­lion dur­ing the 2016/2017 fis­cal year which ends March 31, Al-Qabas news­pa­per re­ported. This comes on top of a $6.6 bil­lion do­mes­tic debt pro­gram which is al­ready un­der­way.

Kuwait, like other en­ergy-rich Gulf Co­op­er­a­tion Coun­cil (GCC) states, has al­ready taken on tens of bil­lions of dol­lars in for­eign debt to fi­nance bud­get short­falls. Saudi Ara­bia, Qatar, Oman and United Arab Emi­rates have sold bonds or took syn­di­cated loans to plug their deficits. The min­is­ter’s de­cree did not spec­ify the share of Is­lamic sukuk bonds in the planned is­sue.

It will be the coun­try’s first for­eign debt in around two decades. Kuwait recorded a bud­get deficit of $15 bil­lion last fis­cal year, break­ing a 16-year run of sur­pluses. Oil in­come con­trib­uted around 95 per­cent of pub­lic rev­enues in those years. Dur­ing the past two years, oil has lost around 60 per­cent of its value.

The state, home to 1.3 mil­lion Kuwaitis and 3 mil­lion for­eign­ers, is also pro­ject­ing a bud­get short­fall of $29 bil­lion this fis­cal year. Dur­ing sur­plus years, Kuwait piled up around $600 bil­lion in its sov­er­eign wealth fund in hold­ings mostly in the United States, Europe and Asia. Like its Gulf peers, Kuwait has taken some aus­ter­ity mea­sures that in­clude lib­er­al­iz­ing prices of diesel and kerosene and hik­ing petrol prices. A dis­pute over petrol prices led par­lia­ment be­ing dis­solved and snap polls set for Nov 26. Par­lia­ment a few months ago ap­proved a law to raise heav­ily sub­si­dized power and wa­ter fees but ex­empted cit­i­zens.

Photo by Yasser Al-Zayyat

KUWAIT: Fire­works light the sky dur­ing cel­e­bra­tions of the open­ing of the Sheikh Jaber Al-Ah­mad Cul­tural Cen­ter yes­ter­day. —

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