Kuwait Strengthens Economic and Financial Reforms with 6 Legislations to Support Vision 2035

- Government Sukuk and borrowing from the Future Generations Reserve to enhance sovereign financing resilience

- Legislation on arbitration, economic circuits, combating commercial concealment, and facilitating company establishment to attract investments

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- 534 projects at ministries and government departments within the 2026/2027 budget, including 101 new projects

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 supported 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 steering the national economy toward a more sustainable path, supporting the comprehensive targets of the Development Vision (New Kuwait 2035), while continuing to implement the state sectors restructuring plan and follow up on major developmental projects in 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 provisions.

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 enhancing the efficiency of financial obligations management in line with financial sustainability targets while maintaining 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 accordance 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 allows for the issuance of Sukuk based on existing government assets, operational benefits and rights of government assets, or assets to be provided in the future.

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The Ministry of Finance has affirmed that it will adopt an institutional and well-considered approach in managing issuances, which supports building a regular and sustainable presence for the State of Kuwait in local and international capital markets and enhances 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 as one of the most important 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 Reserve Fund to support the state’s general reserves.

The law enables the utilization of returns achieved on a repayable basis, ensuring the full preservation of capital and achieving sustainability in asset growth and maximizing their returns in the long term, while enabling the state to manage its needs in a disciplined manner without compromising or depleting the principal wealth, thereby achieving a balance between current requirements and the rights of future generations.

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

The draft decree-law on arbitration, approved by the Council of Ministers in mid-September last year, also represents a pivotal step in strengthening the state’s legal and economic environment, providing clearer guarantees for traders and investors, and bolstering 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 principles established by the Model Law on International Commercial Arbitration and international best practices, while incorporating provisions tailored 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. 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, marks a qualitative leap toward ensuring the proper administration of justice, accelerating the resolution of economic disputes, simplifying litigation procedures, and enhancing the utilization 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 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 on Combating Commercial Concealment was introduced to regulate the environment of economic activities, ensuring transparency, justice, and equal opportunity, while enhancing the state’s capacity for oversight, regulation, and revenue collection. This aims to achieve sustainable economic development and protect public order and the public interest.

Issued last August, the project comprises fourteen articles. It establishes a new phase of transparency and justice in the business environment, contributing to enhanced investor confidence.

The law prohibits commercial concealment by preventing any person from conducting any economic activity in violation of the provisions of the decree, whether directly or indirectly, or by any means whatsoever. This includes allowing the use of a trade name, license, or other means that enable the individual 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. It also adopts a conciliation system as an available legislative option, allowing certain violations to be settled under specific controls and conditions without resorting to imprisonment penalties.

As part of the state’s direction toward a more flexible and transparent business environment, the Council of Ministers approved at the end of September last year a draft decree-law amending certain provisions of the Companies Law issued by Law No. 1 of 2016. The aim is to facilitate the establishment of companies and enhance confidence in dealing with them.

The draft law exempted the requirement to notarize all legal procedures and transactions related to companies from their establishment throughout their existence, as well as any amendments to their contracts and articles of association. It suffices with the writing and signing 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.

The project also authorized free-lance professionals to establish a one-person professional company, and included 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 its implementation.

In parallel, the government continues to enhance the public financial management system, strengthening its efficiency and effectiveness as a fundamental pillar in the reform and development process.

The government has recently launched a four-year program (financial years 2026–2030, from April 1, 2026, to March 31, 2030) to promote integrity, transparency, and governance in the financial performance of government entities.

The program supports two key pillars of the state’s development plan: “Effective Government” and “Creative Human Capital.” It is linked to the concept of the knowledge economy by enhancing specialized financial knowledge, leveraging best practices, and utilizing financial and technical analytical tools to support the quality of financial decision-making and strengthen 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 for 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 there are 433 ongoing projects among ministries and government departments, in addition to 101 new projects.

Furthermore, affiliated bodies have approximately 122 projects, including 15 new projects and 107 ongoing ones.