Kuwait Pioneers New Sukuk Law for Economic Diversification

Kuwait is preparing to enact a landmark law governing the issuance of sukuk, or Islamic bonds, both locally and internationally, in a strategic move to bolster sustainable finance, according to a statement by the prime minister.

Speaking at the World Governments Summit in Dubai, Sheikh Ahmad Abdullah Al-Ahmad Al-Sabah emphasized the country's pursuit of fiscal reforms aimed at economic diversification. As the oil-rich Gulf nation faces budget deficits amid low oil prices, Kuwait has turned to innovative debt instruments, recognizing the crucial role hydrocarbons play in government revenue.

The law will be the first of its kind, aligning with Islamic principles to regulate sukuk issuance, thereby enhancing fiscal flexibility and responsibility. This measure follows Kuwait's impressive return to global debt markets last year, where it successfully raised $11.25 billion through a U.S. dollar bond issuance after a five-year hiatus. Additionally, a new public debt law in March significantly increased Kuwait's borrowing ceiling to $98 billion, up from $32 billion, allowing for extended borrowing terms.