Kuwait- Kuwait said Sunday it plans to tap the international debt market through bond issues to finance its budget deficit after recording a first shortfall in 16 years.
The oil-rich Gulf state plans to “borrow up to three billion dinars ($10 billion) in U.S.-denominated bonds from international markets, in both conventional and (Islamic) sukuk issuance,” Finance Minister Anas al-Saleh told parliament.
The ministry will borrow another two billion Kuwaiti dinars ($6.6 billion) in both conventional and Islamic instruments from the domestic market, Saleh said.
It will be the country’s first foreign debt in around two decades.
The borrowings will take place during the 2016/2017 fiscal year, which began April 1 and ends next March 31, the minister said, without giving specific dates.
Saleh said the finance ministry has already borrowed $2.5 billion from the domestic market.
Saleh, who is also acting oil minister, said Kuwait recorded its first budget deficit of 5.5 billion dinars ($18.3 billion) in the 2015/2016 fiscal year.
Parliament later on Sunday overwhelmingly passed the budget for 2016/2017 projecting a huge deficit due to the slump in oil prices.
Revenues were projected at 10.2 billion dinars ($33.9 billion), while spending was estimated at 18.9 billion dinars ($62.8 billion), leaving a shortfall of 8.7 billion dinars ($28.9 billion).
Kuwait posted healthy budget surpluses for 16 consecutive fiscal years until oil prices began to slide two years ago. Oil income made up around 95 percent of public revenues.
During years of the surplus year, Kuwait piled up around $600 billion in its sovereign wealth fund managed by Kuwait Investment Authority in holdings mostly in the United States, Europe and Asia.