Kuwait requests ability to withdraw from sovereign wealth fund

KUWAIT (Reuters) - Kuwait’s cabinet has submitted draft legislation to parliament that would allow the government to withdraw up to 5 billion dinars ($16.53 billion) from the country’s sovereign wealth fund annually, lawmakers said on Monday.

The Future Generation Fund, a nest egg for when oil runs out that is managed by Kuwait Investment Authority, has only ever been tapped by the government once before - during the first Gulf War.

The proposal may not be approved, a source familiar with the matter said, and could add to Kuwait’s legislative gridlock over the approval of a debt law that would allow the country to borrow.

Parliament has repeatedly blocked a debt bill which would allow Kuwait to tap international debt markets, but the issue has gained urgency as low oil prices and the COVID-19 pandemic have strained state finances and led to the rapid depletion of available cash reserves.

Member of parliament Abdullah Jassim al-Mudhaf, who posted to Twitter the draft legislation on Monday - an amendment to an existing law - warned the government of the “danger of going for this option”.

Another MP, Yousef al-Fadhalah, said on Twitter the proposal “is nothing but a recurring episode in a series of failed projects to address the economic conditions in the country and bring us into a crisis without the slightest effort and real work to address the current liquidity crisis in particular and financial imbalances in general.”

($1 = 0.3025 Kuwaiti dinars)

Reporting by Ahmed Hagagy in Kuwait and Davide Barbuscia in Dubai; Writing by Yousef Saba in Dubai; Editing by Bernadette Baum