Local Report: Between Historical Deficit and Global Race... Does Kuwait Have the Luxury of Delaying AI Infrastructure?

The new 2026-2027 general budget project, totaling 26.1 billion dinars, particularly the projected deficit of 9.8 billion, raises several questions about whether the country can catch up with its Gulf neighbors in building the new infrastructure for a world that commands global attention, keeps pace with rapid developments, and undergoes updates and leaps that can only be described as awe-inspiring and formidable, at least for observers of this new era.

Today, Gulf states are leading a different race in the region: a race involving billions of dollars invested in artificial intelligence (AI) infrastructure to create massive data centers, ultra-high-speed computing, and factory structures for a new world, positioning them to attract major global companies to establish a foothold in a geographic location that serves as a bridge between East and West.

Amidst a Gulf landscape where digital investment is accelerating while the financial gap widens, a question emerges: Is Kuwait capable of delaying the construction of AI infrastructure at a time when the region is racing to acquire it? This concern stems from the fear of repeating the scenario of a dream that faded, alongside numerous other financial and global changes, after its implementation was delayed for more than two decades. This refers to the financial and commercial center launched at the beginning of the millennium. The question here is: Can Kuwait afford to postpone building its AI infrastructure while the region competes to secure it?

The budget project includes estimated revenues of approximately 16.3 billion dinars, of which 78.6% are oil revenues and 3.5 billion dinars are non-oil revenues. Although non-oil revenues have increased, this rise is due to the approval of Decree No. 157 of 2024 regarding taxes on multinational entities, valued at approximately 250 million dinars based on announcements. The assumed price for a barrel of oil is set at $57, compared to $90.5 for the current fiscal year ending in March next year—a reduction of nearly 37% from the previous budget. This highlights that the gap between the "assumed" and "break-even" oil prices is key to understanding the sensitivity of public spending to any decline in revenues.

Regarding AI infrastructure, it is inappropriate to even discuss it in the context of electricity shortages. Although several projects have been announced and are expected to enter service in 2028-2029, and assuming serious AI projects will emerge in the future, will the capacity coming online be sufficient to avoid past setbacks? This is especially critical given the architectural expansion of residential cities and the more than 50,000 residential units awaiting construction permits in the coming years.

The need for countries today to build data centers on their own soil is not a luxury; it has evolved into an issue of national and sovereign security. These centers are factories where AI is produced and operated, requiring massive, uninterrupted electricity. For example, in "Stargate" in the UAE—a data center involving multiple companies—the electrical capacity is estimated at 5,000 megawatts for the project, equivalent to approximately 27% of the country’s current maximum energy production, without even accounting for planned power outages. Similarly, in Saudi Arabia, the infrastructure project, announced with investments of approximately $100 billion, includes a plan to add 15,000 megawatts of electrical power.

Locally, the absence of announcements continues to overshadow the landscape, apart from projects previously announced. However, neither their scale nor their competition matches the projects of regional countries. The issue runs much deeper. If we measure the consumption of existing and future projects, their consumption does not exceed 75 megawatts, compared to Gulf projects consuming thousands of megawatts, which clearly illustrates the vast disparity in the scale of these projects.

Despite the announcement of several initiatives by private companies, in addition to Kuwait Oil Company, this serves as yet another example of isolated projects with limited impact. They cannot be described as a national program funded through a dedicated budget, supported by an integrated legislative and regulatory framework.

The prevailing concern today is that, despite the modest scale of infrastructure projects, the recurring narrative promoting a “financial and commercial center” persists. This raises a key question: Can Kuwait overcome its budget deficit and finance projects through a sovereign wealth fund, as Saudi Arabia and the United Arab Emirates have done?

If we reduce the picture to final figures, Kuwait’s share of government capital expenditure is estimated at around 3 billion dinars, equivalent to $10 billion, under the capital expenditure line. In contrast, Saudi Arabia’s investment in artificial intelligence alone amounts to $100 billion, while the UAE’s share is approximately $148 billion.

Finally, if our characterization is accurate, artificial intelligence has become the defining challenge of our era. It is not merely an application added to a device at a single moment and launched in record time. The question, now that the numbers have been revealed, is no longer “Do we want to?” but rather: “Can we afford to delay amid a race that has already begun?”