Kuwait has stepped up its domestic fundraising efforts, issuing KWD550 million ($1.77 billion) in Treasury bonds and public debt tawarruq instruments across a range of maturities through the Central Bank of Kuwait on behalf of the Ministry of Finance.
The offering was spread across four tenors. Two-year securities accounted for KWD150 million and carried a yield of 2.75%, while KWD250 million was raised through three-year instruments at a yield of 2.70%.
The government also issued KWD100 million in five-year debt with a yield of 3.25%, alongside KWD50 million in seven-year paper offering a return of 3.125%.
With the latest transaction, Kuwait’s domestic borrowing for the 2026/27 fiscal year has climbed to KWD1.25 billion.
Market observers view the increase in borrowing as a reflection of mounting fiscal pressures. Economists point to weaker oil revenue expectations and the economic fallout linked to tensions affecting shipping routes in the Gulf, particularly concerns surrounding disruptions in the Strait of Hormuz.
According to analysts, Kuwait could face a budget shortfall exceeding 13% of gross domestic product this fiscal year if energy income remains under pressure for an extended period. The country’s expenditure profile, which leaves limited room for rapid spending adjustments, is also expected to weigh on public finances.
Earlier this year, Kuwait approved its 2026/27 state budget projecting a deficit of KWD9.8 billion, equivalent to roughly one-fifth of GDP. The spending plan included a significant increase in capital expenditure, with allocations rising to around KWD3 billion, marking a sharp jump from the previous fiscal year’s budget.
