Sun, Nov 06, 2016 - Page 16 News List

Kuwait launches foreign bond sale to finance deficit

AFP, KUWAIT CITY

Kuwait is to issue billions of dollars worth of bonds in international markets to finance a budget deficit resulting from low oil prices, a report said yesterday.

Kuwaiti Minister of Finance Anas al-Saleh said Kuwait is to issue US dollar-denominated sovereign bonds of up to US$9.6 billion during the fiscal year March 31 next year, al-Qabas newspaper reported.

This comes on top of a US$6.6 billion domestic debt program which is already under way.

Kuwait, like other energy-rich Gulf Cooperation Council 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 taken syndicated loans to plug their deficits.

The minister’s decree did not specify the share of Islamic sukuk bonds in the planned issue.

It is to be the country’s first foreign debt in about two decades.

Kuwait recorded a budget deficit of US$15 billion last fiscal year, breaking a 16-year run of surpluses.

Oil income contributed about 95 percent of public revenues in those years. During the past two years, oil has lost about 60 percent of its value.

The emirate, home to 1.3 million Kuwaitis and 3 million foreigners, is also projecting a budget shortfall of US$29 billion this fiscal year.

During surplus years, Kuwait piled up about US$600 billion in its sovereign wealth fund in holdings mostly in the US, Europe and Asia.

Like its Gulf peers, Kuwait has taken some austerity measures that include liberalizing prices of diesel and kerosene and hiking gasoline prices.

A dispute over gasoline prices led to parliament being dissolved and snap polls set for Nov. 26.

Parliament a few months ago approved a law to raise heavily subsidized power and water fees, but exempted citizens.

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