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Kuwait parliament approves new wealth fund law, delays debt reform

Kuwaiti MPs attend a parliament session at the national assembly in Kuwait City on 22 January 2020. [YASSER AL-ZAYYAT/AFP via Getty Images]
Kuwaiti MPs attend a parliament session at the national assembly in Kuwait City on 22 January 2020 [YASSER AL-ZAYYAT/AFP via Getty Images]

Kuwait's parliament on Wednesday approved a law to make transfers of state revenue to one of its sovereign wealth funds conditional on budget surpluses, a move which will provide more than $12 billion in much-needed liquidity to the treasury, Reuters reports.

Parliament, however, returned a public debt law that would allow the government to borrow 20 billion dinars ($65.4 billion) over 30 years to a parliamentary committee for two weeks of further study, it said on its website.

Government and parliament have long been at odds over debt reform, which would allow Kuwait to tap international markets. But the issue has become more urgent in recent months as the oil-exporting nation has been hit by low crude prices and the COVID-19 pandemic.

Kuwait automatically transfers 10% of the state's revenue every year to the Future Generations Fund, one of its sovereign funds, but the law passed by the national assembly on Wednesday will now only allow transfers to the fund when the year's budget is in surplus.

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Meanwhile, it makes available to the government 3.8 billion dinars ($12.5 billion) of accrued money that would have been otherwise transferred to the Future Generations Fund, a parliamentary document seen by Reuters showed.

Some additional money set aside for the fund in the current fiscal year would also now remain available to the treasury, according to the document.

Oil-rich Kuwait faces a deficit of 14 billion dinars ($46 billion) in the current fiscal year, which began on April 1.

Kuwait's Minister of Finance Barak Ali Al-Shitan said to parliament on Wednesday that the government's available liquidity was sufficient to cover salaries until next November.

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KuwaitMiddle EastNews
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