Kuwaiti banks withdrew half their deposits at the Central Bank of Kuwait in the first nine months of 2026, following emergency measures to boost lending as the Iran war disrupted the oil-dependent economy.
Commercial banks’ deposits at the Central Bank of Kuwait (CBK) fell to KD2.4B ($8B) at the end of September, down from KD 4.8B at the end of 2025 according to central bank data.
Stimulus Package
The decline followed a decision in March to ease liquidity requirements as part of a stimulus package, allowing lenders to deploy more funds into loans as the conflict disrupted economic activity.
The figures are therefore expected as local banks support demand for access to credit to cover losses in the medium term.
Eased Liquidity Requirements
The March measures temporarily reduced the minimum liquidity coverage ratio (LCR) and net stable funding ratio from 100 percent to 80 percent. The minimum regulatory ratio was also lowered from 18 percent to 15 percent.
The LCR is a Basel III standard requiring banks to hold sufficient high-quality liquid assets, such as cash and government bonds, to withstand 30 days of liquidity stress.
Government accounts and deposits held at the CBK also declined, falling to KD 1.3B on 30 September from KD 1.37B at the end of FY25.
Pressure on Public Finances
The decline comes as Kuwait faces pressure on public finances following reduced oil export earnings linked to the closure of the Strait of Hormuz.
The revenue shortfall has forced the government to increase borrowing, with public debt rising fivefold by the end of June.
Kuwait, which holds more than 100B barrels of oil reserves, remains heavily dependent on crude exports. Lower oil revenue widened the country’s fiscal deficit for the 2025–26 financial year by nearly 13 percent to KD 7B according to the finance ministry.
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