Kuwait borrowed $25 billion in the last 5 years! Borrowing is back on the table

14/11/2026

As of last month, Kuwait had borrowed $25 billion from international banks to finance its budget deficits, equivalent to approximately KD 1.3 billion annually to cover its recurring expenditure. The budget deficit is likely to grow year after year, driven by population growth, rising government expenditure, the need to create job opportunities for new graduates and other entrants into the labor market, and the increasing financial obligations associated with these responsibilities. It appears increasingly difficult to contain the growth of budget deficits as the annual state budget expands to accommodate population growth and rising public expenditure.

This includes providing job opportunities for fresh graduates and new entrants into the labor market, meeting their associated financial entitlements, and providing adequate housing allowances until the government fulfils its responsibility to provide proper housing, as stipulated in our Constitution. Ultimately, it is the responsibility of the State of Kuwait to provide job opportunities for its young citizens, just as it has done throughout the country’s history since its establishment. Borrowing is likely to increase annually to meet the state’s obligations toward its citizens and ensure the distribution of oil revenues, which belong to every Kuwaiti citizen. This is a state responsibility and constitutional obligation, clearly stipulated without ambiguity. The question, however, is whether the state is borrowing annually to cover its budget deficits or adopting a five-year borrowing strategy, servicing the debt through periodic interest payments rather than repaying the entire principal at once.

Such an approach could allow Kuwait to reduce its debt gradually, particularly in the absence of any decision to liquidate part of its international assets, while continuing to reinvest the returns generated by those assets to secure further income and profits. Perhaps this approach is considered more financially advantageous. Kuwait should be well acquainted with such financial strategies, given its extensive experience in sovereign wealth management. After all, it was the first country to establish a fund for future generations, with the intention of preserving its assets for the benefit of generations to come and protecting them from being depleted.

This principle has been maintained even during periods of financial shortages, budget deficits, and mounting pressure to draw on these reserves. Liquidating or selling assets belonging to the Future Generations Fund should therefore not become an ordinary financing practice. It should only be considered if the available alternatives would prove even more costly. We are concerned that the Future Generations Fund is gradually becoming the “Now Generations Fund.” The alternatives may be numerous, but the preferred option appears to be longterm borrowing rather than short-term borrowing, thereby avoiding the annual publicity. It certainly seems that Kuwait is heading down a path of continued borrowing while seeking to preserve its core overseas investments. Borrowing is definitely back on the table, while reducing annual public expenditure appears to be an option the state simply cannot pursue. Unfortunately, that is the reality!

By Kamel Al-Harami
Independent Oil Analyst

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