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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)
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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.

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Eurasian Development Bank Reveals Partnerships with the Gulf to Develop Energy Projects

Chairman of the Management Board at the Eurasian Development Bank (EDB) Nikolai Podguzov. Asharq Al-Awsat
Chairman of the Management Board at the Eurasian Development Bank (EDB) Nikolai Podguzov. Asharq Al-Awsat
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Eurasian Development Bank Reveals Partnerships with the Gulf to Develop Energy Projects

Chairman of the Management Board at the Eurasian Development Bank (EDB) Nikolai Podguzov. Asharq Al-Awsat
Chairman of the Management Board at the Eurasian Development Bank (EDB) Nikolai Podguzov. Asharq Al-Awsat

Chairman of the Management Board at the Eurasian Development Bank (EDB) Nikolai Podguzov revealed plans to cooperate with GCC countries, including Saudi Arabia, to develop energy infrastructure.

Podguzov told Asharq Al-Awsat that the bank, which is the international financial organization that operates in Central Asia and in Eurasia, works on implementing a working plan based on three strategies.

“Every year we execute around 30-40 new projects and set up agreements,” he said.

“The investments of the bank are growing at least 20% each year,” Podguzov revealed. “We are quite a fast developing bank. Uzbekistan has just joined the bank this year.”

Regarding the size of loans and investments handled by EDB, Podguzov explained that the bank's average investment ranges between $100 million and $400 million. He added however, that the bank is capable of syndicating larger loans that can reach up to $1 billion or more, while the average annual investment volume is around $2.53 billion.

Regarding the bank's work plans for the coming year, Podguzov explained that the Eurasian Development Bank is simultaneously working to strengthen its relations with the GCC countries and the Islamic Development Bank.

“We improve connectivity, transport infrastructure and logistics. We improve access to water for regions in Central Asia. We develop energy infrastructure in our member states,” he told Asharq Al-Awsat.

“We take care of food safety and food safety infrastructure, which provides access to food and provides food security for our member states. And I think in this field we can set up very good economic ties and cooperation between GCC countries and Central Asia.”

“I know that such countries like Saudi Arabia, Emirates, Oman are quite interested in the topics of our strategy,” he said.

“We mainly do non-sovereign finance ... which is very convenient for our potential partners,” he added.

Podguzov said there is a partnership with Masdar which “is a world leader in bringing renewable energy technologies into the world. They are quite active in Central Asia, in Kazakhstan in particular.”

“That is why, for example, we are very much interested in cooperation with Masdar company. This is one of examples. I think logistics and logistics project also could be of interest for Saudi Arabia. A lot of infrastructure could be developed together with the help of Eurasian Development Bank.”

“I believe that it's also very important to build economic bridge between GCC countries and Central Asia. And I think the bank can do a lot in this field and finally we can bring together economic interests of Central Asian and GCC countries.”