#Kuwait looks at palliative liquidity measures in reforms stalemate | Reuters

Kuwait looks at palliative liquidity measures in reforms stalemate | Reuters

Kuwait is trying to cover its fiscal shortfall through asset swaps and tapping its sovereign wealth fund, as a standoff between government and parliament pushes the cabinet to look for palliative measures while structural reforms remain deadlocked.

The oil-rich Gulf state, hit hard by lower oil prices and the COVID-19 pandemic, faces near-term liquidity risks, largely because parliament hasn’t authorised government borrowing.

This week, the cabinet submitted a draft bill to parliament that would allow it to withdraw up to 5 billion dinars ($16.54 billion) per year from the country’s Future Generations Fund. The fund, a nest egg for when oil runs out that is managed by Kuwait Investment Authority (KIA), has only been tapped once, during the first Gulf War.

But the proposal may not be approved and government sources said in any case it would only buy some time, without addressing longer-term budgetary needs.