When Kuwait’s prime minister returns to office in the coming weeks, he faces an apparent paradox: the Gulf state with a $550bn sovereign wealth fund is running short on cash to pay ballooning public sector salaries, the Financial Times reported. Oil accounts for 90 per cent of its revenue, but slumping prices have hit the western ally’s income hard, putting its forecast deficit close to 40 per cent of GDP, higher than it was in the 1990s, during the financially perilous aftermath of the first Gulf war when Iraq invaded Kuwait.
Kuwait’s parliament passed a long-awaited insolvency law on Tuesday to help attract investment and commerce, Bloomberg Law reported. The absence of insolvency protection has been cited as a significant deterrent to foreign investment. The new law restructures the legal framework for bankruptcy to focus on rehabilitating troubled companies rather than liquidation.