The Kuwaiti government will borrow between KWD 3 billion and KWD 6 billion (approximately $10 billion to $20 billion) in the 2025/26 fiscal year through conventional and Islamic instruments. The measure reflects growing fiscal pressure from weaker oil revenue.
The fiscal deficit is projected to widen to KWD 3.8 billion in 2025/26, up sharply from KWD 1.2 billion in 2024/25. The borrowing plan will draw on both domestic and international markets, enabled under a March 2025 debt law that permits up to KWD 30 billion in debt instruments with maturities of up to 50 years.
Local banks have already raised KWD 850 million via debt offerings this year, further issuances are expected. The strategy aims to preserve the general reserve fund and maintain sovereign fiscal buffers.
Real GDP is forecast to grow 0.2% in 2025, reversing two years of contraction, with non‑oil GDP rising by 2.1%. (Planned capital expenditure for 2025/26 is set to fall 1.6% year on year to KWD 1.8 billion, but debt issuance is expected to inject liquidity into project activity.
Oil GDP is expected to rebound by 2.6% in 2026, up from –1.8% in 2025, as crude output recovers. The Kuwait Petroleum Corporation aims to increase output to 4 million barrels per day by 2035, up from 3.2 million bpd, suggesting a long‑term upside for the oil sector.
Consumer spending fell 5.3% year on year to KWD 11.3 billion in Q1 2025, weighed down by higher financing costs and limited government wage spending. Analysts expect spending to recover as project‑linked job creation picks up. Inflation averaged 2.4% in the first half of 2025, down from 3.1% in the same period in 2024, which should help support real incomes and aid the recovery in consumer activity.
