Dubai, London, Kuwait City: Kuwait hired consulting firm Oliver Wyman & Co. to advise on a debt strategy as it prepares to tap the global bond market to plug a budget gap after oil revenue slumped.
The country is planning to sell international bonds and has already started issuing local debt to cover an estimated fiscal shortfall of about 8 billion dinars (Dh97.28 billion, $26.5 billion), Finance Minister Anas Al Saleh said in an interview in Kuwait City on Wednesday.
“You have to finance the deficit one way or another,” Al Saleh said. “We started going to the local market by the central bank and we are increasing our issuance. We see a great appetite. Now we are going to the international debt market.”
Al Saleh declined to comment on the size or timing of international bond sales, saying no decision has been taken yet, though he rubbished media reports that $5 billion of debt would be sold in the third quarter of this year.
The plunge in oil prices is forcing Kuwait to rethink its finances. Al Saleh is pushing an economic reform agenda to help reduce dependence on crude, by cutting wasteful spending, reducing utility subsidies and introducing corporate taxes.
The oil decline “has clearly shown the structural issues in our economy,” the minister said. “But, and this is the good side, with our robust budget, having low debt, strong local and international reserves, it helps us making reform quite steadily” without “reacting aggressively” with steep spending cuts.
