Kuwait’s fiscal deficit is projected to average 8.9% of GDP between 2025 and 2028, up from an estimated 2% in 2024, according to S&P Global Ratings.
The wider deficit reflects lower oil prices and persistent high public spending, driven largely by wages, subsidies, and grants, which make up around 70% of total government expenditure, S&P analyst Juili Pargaonkar said.
Brent crude prices are forecast to average $65 per barrel in 2025, rising to $70 from 2026 to 2028. S&P projects the deficit will fall to 6% of GDP by 2028 as oil production increases and non-oil revenue measures take effect.
The government is advancing fiscal reforms that include potential corporate and excise taxes, subsidy adjustments, and improvements in procurement processes. It is also aiming to grow non-oil income through higher service fees and enhanced digital tax collection systems.
Economic growth is expected to remain subdued, at around 2% in 2025 and 2026, in line with weaker global conditions. S&P forecasts a slight rebound to 2.6% in 2027 and 2028, supported by increased oil output and spillover into the non-oil economy.
A financing and liquidity law enacted in March 2025 will allow Kuwait to tap domestic and international debt markets, giving the government access to broader funding channels.
