Decree-Law Issued Authorizing Borrowing from the "Future Generations Fund"
Today (Tuesday), Decree-Law No. 81 of 2026 concerning the amendment of certain provisions of Decree-Law No. 106 of 1976 concerning the Future Generations’ Reserve was issued. The decree, published in a special supplement to the Official Gazette, stipulates the following:
Having reviewed the Constitution;
Having reviewed the Emiri Order dated 2 Dhu al-Qi’dah 1445 AH (corresponding to 10 May 2024);
Having reviewed Decree-Law No. 106 of 1976 concerning the Future Generations’ Reserve, and its amended laws;
Having reviewed Decree-Law No. 31 of 1978 on the rules for preparing general budgets, supervising their implementation, and the final account, and its amended laws;
Having reviewed Law No. 47 of 1982 establishing the Public Authority for Investment;
Upon the proposal of the Minister of State for Economic Affairs and Investment;
And after approval by the Council of Ministers;
We have issued the following Decree-Law:
Article One
The following texts shall replace the text of the first paragraph of Article One, and the text of the second paragraph of Article Two of the aforementioned Decree-Law No. 106 of 1976:
* Article One (first paragraph): “In the event that annual revenues exceed expenditures, a percentage of the actual surplus from the state’s final account results shall be deducted annually. This percentage shall be determined based on a proposal by the Minister responsible for chairing the board of directors of the Public Authority for Investment and with the approval of the Council of Ministers, effective from the results of the fiscal year 2018/2019.”
* Article Two (second paragraph): “The Public Authority for Investment shall invest these funds, and it may use all necessary financial, investment, and financing instruments for this purpose. The returns on its investments shall be credited to this account.”
Article Two
Two new paragraphs shall be added to the text of Article Three of the aforementioned Decree-Law No. 106 of 1976, and a new Article (Third Repeated) shall be added to the same decree-law, with the following texts:
* Article (Third) – Two new paragraphs: “Notwithstanding the foregoing, by decision of the Council of Ministers, upon a proposal from the Minister responsible for chairing the board of directors of the Public Authority for Investment and after approval by the Board of Directors, borrowing may be undertaken from the Future Generations’ Reserve to support the state’s general reserve. Such decision shall include the following:
1. The loan amount.
2. The purpose of the loan and its returns.
3. The duration and the repayment schedule for the loan or its installments and returns.
4. Conditions and controls for rescheduling or restructuring the loan repayment.
5. Any other data and provisions necessary to regulate and implement the loan.
In accordance with the provisions of the preceding clauses, the loan amount and accrued returns shall be recorded as a receivable asset in the Future Generations’ Reserve account. The loan shall have priority for repayment from state revenues in the event of a surplus in the general budget after the approval of the state’s final account. Under no circumstances shall the loan be written off or reduced except by law.”
* Article (Third Repeated): “Borrowing from the Future Generations’ Reserve shall be subject to the following controls:
1. The total amount of loans during any single fiscal year shall not exceed 100% of the average returns realized by the Reserve over the last five audited fiscal years.
2. The total outstanding balance of accumulated loans shall not exceed 10% of the net asset value of the Reserve, according to its audited financial statements for the last fiscal year.
3. No new loans shall be contracted if either of the ceilings stipulated in clauses (1) and (2) of this Article is exceeded. This prohibition shall only be lifted after the borrowing ratios fall back to the prescribed limits.”
Article Three
Any provision contrary to the provisions of this Decree-Law is hereby repealed.
Article Four
The Prime Minister and the Ministers, each within their respective jurisdictions, shall implement this Decree-Law. It shall be published in the Official Gazette and shall take effect from the date of its publication.
The explanatory memorandum for Decree-Law No. 81 of 2026, amending certain provisions of Decree-Law No. 106 of 1976 concerning the Future Generations Fund, was published as follows:
In line with the State of Kuwait’s commitment to strengthening the legal and institutional protection of the Future Generations Fund, regarded as one of the key sovereign pillars supporting the country’s financial and economic sustainability across generations, this fund was established pursuant to Decree-Law No. 106 of 1976 as a strategic savings instrument to safeguard the rights of future generations to a share of the nation’s wealth. Since its establishment, the fund has achieved its intended objectives, thereby reinforcing its status as one of the largest sovereign wealth funds globally.
Given that Decree-Law No. 106 of 1976, along with its amendments, did not permit the General Reserve to borrow from the Future Generations Fund, it became necessary to establish a mechanism governing such borrowing when required, while reinforcing the principle of protecting the fund’s assets and preventing any direct or unorganized withdrawals. Simultaneously, a regulated mechanism was introduced to allow the utilization of realized returns on a repayable basis, ensuring full preservation of the principal, achieving sustainable asset growth, and maximizing long-term returns. This approach enables the State to manage its needs in a disciplined manner without compromising or depleting the core wealth, thereby balancing present requirements with the rights of future generations.
In light of the foregoing, and given the Amir’s Order dated May 10, 2024, which stipulated in Article 4 that “laws shall be issued by decree-laws,” the present Decree-Law was drafted to amend certain provisions of Decree-Law No. 106 of 1976 mentioned above.
The present Decree-Law comprises four articles. Article One replaces the text of the first paragraph of Article One and the second paragraph of Article Two of Decree-Law No. 106 of 1976.
The replaced first paragraph of Article One of the aforementioned Decree-Law stipulates that the percentage annually deducted for the Future Generations Fund account from the actual surplus of the State’s final accounts, when annual revenues exceed expenditures, shall be determined based on a proposal by the Minister responsible for chairing the Board of Directors of the Public Authority for Investment and with the approval of the Council of Ministers. This change replaces the designation of a specific minister to avoid the need for legislative amendments in the future should the administrative affiliation of the Public Authority for Investment be transferred to another minister or a different ministerial portfolio.
The replaced second paragraph of Article Two of the same Decree-Law reaffirms the competence of the Public Authority for Investment to manage the assets of the Future Generations Fund account, in alignment with Law No. 47 of 1982 establishing the Authority, recognizing it as the most technically qualified entity to do so. It grants the Authority the necessary powers to invest and manage these funds using all financial, investment, and financing instruments according to best technical standards, aiming to maximize the benefits of such investments, while emphasizing that the returns from these investments shall be added to the Future Generations Fund account.
Article Two of the present Decree-Law adds two new paragraphs to Article Three of Decree-Law No. 106 of 1976 mentioned above. The first paragraph permits borrowing from the Future Generations Fund to support the State’s General Reserve, subject to a decision by the Council of Ministers based on a proposal from the Minister responsible for chairing the Board of Directors of the Public Authority for Investment and after approval by its Board of Directors. This decision must specify the loan amount, purpose, and return, the repayment period, the repayment schedule for the loan or installments and returns, conditions and regulations for rescheduling or restructuring the loan, and any other necessary data and provisions to regulate and implement the loan. This constitutes an exception to the general rule established in Article Three of Decree-Law No. 106 of 1976, which previously prohibited drawing any amount from the Future Generations Fund. The second added paragraph mandates that the loan amount and its obligations—installments and returns—be recorded as a principal claim in favor of the Future Generations Fund to safeguard its accounting rights. It grants the loan priority repayment from State revenues in the event of a surplus in the State’s General Budget account after the approval of its final accounts. Furthermore, it protects this loan by prohibiting its write-off or reduction except through a law enacted for that purpose.
Article Two of the present Decree-Law also adds a new article, designated as Article Three bis, to Decree-Law No. 106 of 1976 mentioned above, outlining the regulations for borrowing from the Future Generations Fund. It stipulates that the total outstanding loans during a single fiscal year shall not exceed 100% of the average returns realized by the Fund over the last five audited fiscal years. Additionally, the total cumulative loan balance shall not exceed 10% of the net asset value of the Fund according to its audited financial statements for the last fiscal year. The issuance of any new loans is prohibited if either of these ceilings is exceeded, and no new loans may be issued as long as borrowing ratios remain above these limits.
Article Three of the present Decree-Law repeals all provisions conflicting with its terms. Article Four obligates the Prime Minister and Ministers, each within their respective jurisdictions, to implement its provisions, publish it in the Official Gazette, and specifies that its effective date shall be from the date of such publication.
