Kuwait to issue bond to cover deficit
KUWAIT will issue billions of dollars worth of bonds sold on international markets to finance a budget deficit resulting from low oil prices.
Finance Minister Anas al-Saleh said Kuwait will issue US dollar denominated sovereign bonds of up to US$9.6 billion during the 2016-17 fiscal year which ends March 31.
This comes on top of a $6.6 billion domestic debt program which is already under way.
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 60pc of its value.
The emirate, 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. –