Arabia Monitor quoted in Debtwire's article "Kuwait arrives fashionably late to GCC bond party; investors benchmark against Abu Dhabi"

Debtwire previews Kuwait's upcoming bond sale and lists major risk factors including questions over economic development, funding needs, and political issues pertaining to the threat from parliament.

“The economy grew at 2.5% in 2016 (1.1% in 2015) and is expected to edge up slightly to 2.6% in 2017, supported by an increase in public investment and domestic demand,” said Dr Florence Eid-Oakden, chief economist at Arabia Monitor.

“In 2016, due to weaker oil prices, Kuwait saw its first fiscal deficit (USD 31.7bn; 29% of GDP), after 16 years of surpluses,” she added.

“The government launched ‘New Kuwait 2035’ through 164 strategic development programmes. The objectives of this plan are consistent with other regional development plans, such as Saudi’s Vision 2030. The plan features seven pillars, which will pursue diversification and growth,” said Arabia Monitor’s Eid-Oakden.

Commenting on funding needs, Dr Eid-Oakden explained: “Kuwait will need USD 26bn (20% of GDP) of funding in 2017, after transfers to the Future Generations Fund, part of Kuwait’s sovereign wealth fund, the Kuwait Investment Authority (KIA). We expect continuity in the way the funds will be broadly managed.

“KIA now manages assets estimated at USD 592bn by the Sovereign Wealth Fund Institute, with holdings in the General Reserve Fund estimated at around USD 80bn to USD 100bn (from around USD 60bn in 2013),” she said.

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