Kuwait is preparing to introduce its first comprehensive law regulating the issuance of Islamic bonds, known as sukuk, both domestically and on international markets, Prime Minister Sheikh Ahmad Abdullah Al-Ahmad Al-Sabah announced on Wednesday.
Speaking at the World Governments Summit in Dubai, the prime minister said the proposed legislation is part of broader efforts to strengthen Kuwait’s financial framework and reduce long-term dependence on oil revenues.
According to Al-Sabah, the government is increasingly turning to diversified debt instruments to support economic resilience and ensure fiscal sustainability. Sukuk issuance, structured in line with Islamic financial principles, is expected to play a central role in this strategy.
“We are close to approving legislation that will regulate the issuance of government sukuk locally and internationally in accordance with Islamic law,” the prime minister said. “This will allow us to address financial challenges with greater flexibility and responsibility, while planning more effectively for the medium and long term.”
Reducing Reliance on Oil Revenue
Kuwait’s economy remains heavily dependent on hydrocarbons, which account for nearly 90 percent of government revenue as of 2024. However, fluctuating oil prices and rising public spending have increased pressure on the country’s fiscal position, prompting renewed momentum for reform.
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In recent years, the government has introduced measures aimed at stimulating growth, managing public finances, and narrowing the budget deficit. Expanding access to global debt markets is viewed as a key component of this approach.
Kuwait made a notable return to international debt markets last year, attracting strong investor interest and raising approximately $11.25 billion through a three-tranche bond offering. The issuance marked the country’s first U.S. dollar-denominated bond sale since 2017.
Expanded Borrowing Capacity
Further supporting these efforts, Kuwait enacted a revised public debt law in March, significantly increasing the country’s borrowing limit. The new legislation raised the debt ceiling to 30 billion Kuwaiti dinars (around $98 billion), up from the previous limit of 10 billion dinars, and extended allowable borrowing tenures.
Officials believe the planned sukuk law will complement the updated debt framework by providing additional, Shariah-compliant financing options and improving access to a broader pool of investors.
Once approved, the legislation is expected to enhance Kuwait’s ability to manage fiscal pressures while advancing its long-term economic diversification goals.
