The passage of the debt law, the draft of which is being discussed by the Council of Ministers, will help Kuwait raise new debt, which will finance nearly 30% of the deficit, Fitch Ratings said.

“Enacting this law would enable Kuwait to raise new debt, following the expiry of the previous debt law in 2017,” a report said.

Despite the absence of a public debt law that enables sovereign borrowing, Kuwaiti issuers were the Gulf Cooperation Council’s (GCC) third-largest US dollar debt issuers in 2024.

The law is expected to be passed in the fiscal year ending March 2026, although delays are possible, Fitch stated.

Dollar issuance by the sovereign has not taken place since 2017, prior to the expiry of the previous debt law. That said, dollar issuance by Kuwaiti issuers surged to $13.6 billion in 2024 from $60 million in 2023, driven mainly by banks, compared with total dollar issuance of $.8 billion across all sectors during 2018–2023.

Sukuk share of Kuwait’s debt capital market outstanding rose to 27% by end-January 2025.

Gross government debt/GDP remains low at an estimated 2.9% in FY 2024.

Fitch forecasts that government debt/GDP will rise if the liquidity law is passed in FY 2025, in addition to the projected deficits and lower oil prices. A $4.5 billion eurobond is maturing in 2027.

“Even without a liquidity law, the government would still be able to meet its financing obligations in the coming years,” the rating agency said.

(Editing by Brinda Darasha; brinda.darasha@lseg.com)