Kuwait Says Needs to Borrow $66Bn Over 30 Yrs

Kuwait heads towards a huge financial borrowing project for the next three decades (Asharq Al-Awsat)
Kuwait heads towards a huge financial borrowing project for the next three decades (Asharq Al-Awsat)
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Kuwait Says Needs to Borrow $66Bn Over 30 Yrs

Kuwait heads towards a huge financial borrowing project for the next three decades (Asharq Al-Awsat)
Kuwait heads towards a huge financial borrowing project for the next three decades (Asharq Al-Awsat)

Kuwait government’s need to pass a law on public debt that would enable it to borrow 20 billion dinars ($65.3billion) over 30 years “is still urgent and necessary,” Finance Minister Barak al-Shitan said on Sunday.

The finance and economic committee has also suggested reducing the period for borrowing, Shitan added after meeting lawmakers.

The public debt would not exceed 60 percent of gross domestic product and proceeds would go to infrastructure and development projects, he told reporters after meeting the committee.

The government will study an idea to lower by half the ceiling on public debt as part of proposed amendments to a law it’s struggled to push through parliament, he noted.

Kuwait has two billion dinars ($6.6 billion) worth of liquidity in its Treasury and not enough cash to cover state salaries beyond October, he has earlier noted.

“The government is withdrawing from its General Reserve Fund at a rate of 1.7 billion dinars a month, meaning liquidity will soon be depleted if oil prices don’t improve and if Kuwait can’t borrow from local and international markets,” he said.

The panel has proposed reducing the limit from 20 billion dinars ($66 billion) to 10 billion dinars, said the committee’s head, Safa al-Hashem.

The proposal suggests that the law be reconsidered within three years in terms of the debt ceiling and repayment period, Hashem added, provided that the next finance minister presents a complete economic reform program on the way to cut expenditure, boost revenue, and lay out clear repayment mechanisms.

Kuwait is going through one of its worst economic crises due to the COVID-19 outbreak and the decline in oil prices – given that oil is the key source to fund the general budget. Before that, the deficit in Kuwait was expected to reach KWD7.7 billion ($25 billion) for the fiscal year from April 1 to March 31.

The government and parliament have long been at odds over the law that would allow Kuwait to tap international debt, but the issue has gained urgency in recent months due to the COVID-19 pandemic and low crude prices.



Gold Slips as US Bond Yields Rise, Investors Assess New Tariffs

Gold rings are displayed in a gold shop in Chinatown in Bangkok, Thailand August 21, 2018. REUTERS/Soe Zeya Tun/File Photo
Gold rings are displayed in a gold shop in Chinatown in Bangkok, Thailand August 21, 2018. REUTERS/Soe Zeya Tun/File Photo
TT
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Gold Slips as US Bond Yields Rise, Investors Assess New Tariffs

Gold rings are displayed in a gold shop in Chinatown in Bangkok, Thailand August 21, 2018. REUTERS/Soe Zeya Tun/File Photo
Gold rings are displayed in a gold shop in Chinatown in Bangkok, Thailand August 21, 2018. REUTERS/Soe Zeya Tun/File Photo

Gold prices eased on Tuesday, weighed by higher US Treasury yields as US President Donald Trump announced new tariff proposals on trading partners, including Japan and South Korea.

Spot gold was down 0.2% at $3,328.67 per ounce, as of 1207 GMT. US gold futures fell 0.1% to $3,338.20.

The yield on benchmark US 10-year notes rose to a two-week peak, making the non-yielding bullion less attractive.

"Gold is stuck between a rock and a hard place," said UBS commodity analyst Giovanni Staunovo, Reuters reported.

"Negative for the gold price is the US decision to extend the deadline for a trade deal for many trade partners, positive for the gold price is the fact that key US trading partners in Asia might have to deal with higher tariffs in the near future, weighing on economic growth prospects."

On Monday, Trump told 14 countries that sharply higher tariffs would start on August 1, marking a new phase in the trade war he launched in April, with levies between 25% and 40%.

The new deadline was firm, Trump said, adding that he would consider extensions if countries made proposals for a trade deal.

"Reciprocal tariffs" were to be capped at 10% until July 9 to allow for negotiations, but so far, agreements have been reached only with Britain and Vietnam. In June, Washington and Beijing agreed on a framework covering tariff rates.

Meanwhile, China has warned the Trump administration against reigniting trade tensions and threatened to retaliate against nations that strike deals with the US to exclude it from their supply chains.

Trump's tariffs have stoked inflation fears, further complicating the US Federal Reserve's path to lower interest rates.

Investors await minutes of the Fed's June meeting, due on Wednesday, for more clues into the bank's policy outlook.

Spot silver fell 0.1% to $36.71 per ounce, platinum rose 0.2% to $1,372.51, and palladium rose 0.6% to $1,117.33.