Kuwait Seeks Approval to Use Wealth Fund to Finance Deficit

Kuwait’s government submitted a draft law to parliament seeking permission to withdraw as much as 5 billion dinars ($16.5 billion) a year from the country’s sovereign wealth fund to help finance a spiraling deficit, Bloomberg News reported. If approved by lawmakers, it would be the first time since the aftermath of the Gulf War in 1990 that Kuwait had extracted funds from the $600 billion Future Generations Fund. Previous withdrawals were treated as loans and had to be repaid. The government’s also attempting to push through parliament legislation allowing it to tap international bond markets, and wants to plug its monthly shortfall using both cash and debt, according to two people familiar with the matter who aren’t authorized to speak publicly. The Future Generations Fund is managed by the Kuwait Investment Authority and is designed to safeguard the Gulf Arab nation’s wealth for when it can no longer depend on oil income. Lower oil prices, compounded by the pandemic, have battered Kuwait’s finances. The government has transferred the treasury’s final performing assets to the FGF in exchange for cash to help service the deficit, estimated at 12 billion dinars ($39.7 billion) in the fiscal year starting April 1. Read more.