News Report: Kuwait Achieves Legislative Leap in Developing Economic and Financial Infrastructure

Government steps in the State of Kuwait accelerated during the third quarter of the current year toward achieving 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 over the past two months embody a strategic government commitment to steer the national economy toward a more sustainable path, supporting the comprehensive targets of the Development Vision “Kuwait New 2035,” while continuing to implement the plan to restructure state sectors and follow up on major developmental projects across the country.

The approval of Law No. (90) of 2026 concerning Government Sukuk represents an important step in developing the sovereign financing system in the State of 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 in 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 managing financial obligations, in line with financial sustainability targets and preserving 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 instrument; Sukuk will provide a tool for refinancing existing debt in alignment 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 distinguished by the broad scope of instruments the government can use, as it permits the issuance of Sukuk based on existing government assets, or on benefits and operational rights of government assets, or on 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 the State of Kuwait in local and international capital markets and enhance its status as a sovereign source.

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

The amendment to the Future Generations Fund law enhances the flexibility of sovereign financing, alongside the Financing and Liquidity Law issued by the government in the first quarter of the current year, which allows the state to issue local and external debt instruments up to a value of 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 crucial step in strengthening the state’s legal and economic environment, providing clearer guarantees for counterparties 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 single framework, rather than distributing its provisions across multiple laws, guided by principles established by the Model Law on International Commercial Arbitration and international best practices, while incorporating rules suited to the nature of Kuwait’s legal system and the needs of 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, and facilitating the use of electronic means in proceedings, hearings, and document exchange.

In a related development, the Law Establishing Economic Circuits, 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 circuits 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, assisted by a specialized technical office to support their work.

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

The draft Decree-Law No. 78 of 2026 aims to combat commercial concealment, with the goal of regulating the environment for economic activities to ensure transparency, justice, and equal opportunity, while enhancing the state’s capacity for supervision, regulation, and revenue collection. This serves to achieve sustainable economic development and protect public order and the public interest. The draft, issued last August, comprises fourteen articles, establishing a new phase of transparency and justice in the business environment and contributing to strengthening investor confidence.

The law prohibits commercial concealment by preventing any person from engaging in any economic activity in violation of the provisions of the decree, 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 violation of the law. The law ensures respect for the rights of bona fide third parties and prevents any abuse in its application, while introducing a settlement system as a legislative option that allows for the resolution of certain violations under specific controls and conditions, without resorting to custodial penalties.

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

Furthermore, the draft allows self-employed professionals to establish a professional company with a single shareholder. 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.

Alongside these efforts, the government continues to elevate the public financial management system, enhancing its efficiency and effectiveness as a cornerstone of 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 key 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 technical analytical tools. These efforts contribute to improving the quality of financial decision-making and reinforcing the foundations of sustainable development within the framework of Kuwait Vision 2035.

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

The draft General Budget for the fiscal year 2026/2027 indicates that there are 433 ongoing projects across ministries and government departments, in addition to 101 new projects. Furthermore, affiliated bodies have approximately 122 projects, including 15 new projects and 107 ongoing projects.