Kuwait Achieves Legislative Leap in Developing Economic and Financial Infrastructure in Support of 'New Kuwait 2035' Vision

By Ahmed Abdulstatar (Report) Kuwait, Oct 9 (KUNA) -- The Kuwaiti government has accelerated its steps during the third quarter of this year to achieve a qualitative leap in developing the financial and economic infrastructure through a package of legislative reforms backed by structural transformations aimed at improving the business environment, diversifying income sources, and enhancing the attractiveness of foreign investments.

Six laws approved by the Council of Ministers in the past two months embody the government’s strategic commitment to steering the national economy toward a more sustainable path, supporting the comprehensive targets of the development vision “New Kuwait 2035.” This comes alongside the continued implementation of the state sectors’ restructuring plan and the follow-up of major developmental projects across the country.

The approval of Law No. (90) of 2026 concerning Government Sukuk represents a significant step in developing the sovereign financing system in Kuwait by expanding the range of financial instruments available to the state and adding an instrument compliant with Islamic Sharia principles. The new law allows for the inclusion of Sukuk within the sovereign financing structure alongside traditional debt instruments, thereby enhancing the flexibility of managing financing needs, diversifying funding sources and the investor base locally and internationally, and supporting the state’s direction toward developing capital markets and improving the efficiency of financial obligations management. This aligns with financial sustainability targets and helps maintain the strength of the state’s financial position.

The explanatory memorandum of the law indicates that the objectives of the legislation go beyond merely creating an Islamic investment tool; Sukuk will provide a mechanism for refinancing existing debt in line with the government’s financing plan. Furthermore, the legislation is expected to contribute to the development of local markets and the growth of the national economy. The law is characterized by the broad scope of tools the government can use, as it permits the issuance of Sukuk based on existing government assets, operational benefits and rights of government assets, or assets to be provided in the future.

The Ministry of Finance has affirmed that it will adopt an institutional and well-considered approach in managing issuances, which will support building a regular and sustainable presence for Kuwait in local and international capital markets and enhance its status as a sovereign issuer.

In line with the state’s commitment to strengthening the legal and institutional protection of the Future Generations Reserve Fund as one of the key sovereign pillars supporting the country’s financial and economic sustainability across generations, the government issued Decree-Law No. 81 of 2026, which allows the government to borrow from the Future Generations Reserve Fund to support the state’s general reserves. The law enables the utilization of returns on a repayable basis, ensuring full preservation of the principal, achieving sustainability in asset growth, and maximizing returns over the long term. It also empowers the state to manage its needs in a disciplined manner without compromising or depleting the core wealth, thereby achieving a balance between current requirements and the rights of future generations.

The amendment to the Future Generations Reserve Fund law enhances the flexibility of sovereign financing, alongside the Financing and Liquidity Law issued by the government in the first quarter of this year, which allows it to issue local and external debt instruments worth up to 30 billion Kuwaiti dinars (approximately 97.3 billion US dollars).

Additionally, the draft decree-law on arbitration, approved by the Council of Ministers in mid-September last year, represents a fundamental step in strengthening the state’s legal and economic environment, providing clearer guarantees for market participants and investors, and supporting Kuwait’s position as an attractive financial and commercial hub for investment.

The new legislation places arbitration in all its forms within a unified framework, rather than distributing its provisions across multiple laws. It draws on several principles established by the Model Law on International Commercial Arbitration and international best practices, while incorporating provisions suited to the nature of Kuwait’s legal system and the state’s commercial and investment environment. The Arbitration Law provides a faster and more flexible means of resolving disputes, particularly commercial and investment-related ones, while enhancing guarantees of neutrality, transparency, and confidentiality. It also facilitates the use of electronic means in procedures, hearings, and the exchange of documents.

In a related development, the Law on the Establishment of Economic Circles, issued last August, represents a qualitative leap toward ensuring the proper administration of justice, accelerating the resolution of economic disputes, simplifying litigation procedures, and enhancing the use of electronic means. The law provides for the establishment of specialized economic circles within the Court of First Instance, the Court of Appeal, and the Court of Cassation, which have jurisdiction over the economic, commercial, and investment disputes specified by the law. These circles are supported by a specialized technical office to assist their work.

The new law contributes to strengthening confidence in the investment climate, reducing costs and risks, and accelerating the return of idle funds to the economic cycle, thereby supporting the country’s competitiveness and consolidating its position as a regional financial and commercial hub, in line with the objectives of “New Kuwait 2035.”

Meanwhile, the draft Decree-Law No. 78 of 2026 on Combating Commercial Concealment, issued last August, aims to regulate the environment for economic activities to ensure transparency, justice, and equal opportunity, while enhancing the state’s capacity for oversight, regulation, and revenue collection. This supports sustainable economic development and protects public order and the public interest. The decree-law, consisting of fourteen articles, establishes a new phase of transparency and justice in the business environment and aims to strengthen investor confidence.

The law prohibits commercial concealment by preventing any person from engaging in any economic activity in violation of the decree’s provisions, whether directly or indirectly, or by any means whatsoever, including allowing the use of a trade name, license, or other means that enable the person to conduct economic activities in contravention of the law. The law also ensures respect for the rights of bona fide third parties, prevents any abuse in application, and introduces a settlement system as an available legislative option to resolve certain violations under specific controls and conditions, without resorting to custodial sentences.

In line with the state’s direction toward a more flexible and transparent business environment, the Council of Ministers approved at the end of last September a draft decree-law amending certain provisions of the Companies Law issued under Law No. 1 of 2016, with the aim of facilitating company establishment and enhancing confidence in dealing with companies. The draft exempts the requirement to notarize all legal procedures and transactions related to companies from their establishment throughout their existence, including amendments to their contracts and articles of association, and instead requires only that they be written and signed by the partners or their representatives. The new law considers registration in the Commercial Register as constituting notarization, which renders the company contract, its amendments, and the resolutions of its extraordinary general assembly enforceable against third parties.

Furthermore, the draft allows sole practitioners in liberal professions to establish a professional company consisting of a single person. It also includes transitional provisions granting existing offices and companies a one-year period to regularize their status, while preserving the validity of contracts and companies established prior to the law’s implementation.

In parallel, the government continues to elevate the public financial management system, enhancing its efficiency and effectiveness as a fundamental pillar in the reform and development agenda. The government recently launched the Integrity, Transparency, and Governance Enhancement Program for Financial Performance in Government Entities, a four-year financial program running from April 1, 2026, to March 31, 2030. The program supports two core pillars of the state’s development plan: “Effective Government” and “Creative Human Capital,” aligning with the concept of a knowledge-based economy by strengthening specialized financial knowledge, leveraging best practices, and utilizing financial and analytical tools to support the quality of financial decision-making and reinforce the foundations of sustainable development within the framework of “Kuwait 2035.”

Earlier this year, Kuwait intensified its measures to stimulate economic activity and enhance financial sustainability through several pathways, including continuing capital expenditure directed toward developmental projects, reforming the regulatory framework governing the private sector, expanding the creation of new economic opportunities and sectors, and supporting private sector participation in developmental projects.

The draft General Budget for the fiscal year 2026/2027 indicates that ministries and government departments have 433 ongoing projects, in addition to 101 new projects. Furthermore, affiliated entities have approximately 122 projects, including 15 new ones and 107 ongoing ones. (End) S.A.R.