KUWAIT CITY, Sept 2 (Bernama-Xinhua) -- Kuwait on Tuesday issued a decree allowing the government to borrow from its sovereign wealth fund to support state finances, ending a decades-old restriction on tapping the country's long-term savings for budgetary needs, reported Xinhua.
The decree, published in the official gazette Kuwait Today, allows the government to borrow from the country's sovereign wealth fund -- known as the Future Generations Fund and managed by the Kuwait Investment Authority -- to support the General Reserve Fund, which serves as the government's treasury and is used to finance state budget expenditures.
Under the new rules, borrowing requires Cabinet approval, with each loan required to specify its amount, purpose, return, repayment period and schedule, as well as terms for any rescheduling.
Annual borrowing cannot exceed the fund's average returns over the previous five audited fiscal years, while total outstanding loans are capped at 10 per cent of the fund's net asset value. No new borrowing is permitted if either limit is reached.
The decree also gives the loans priority for repayment from state revenues and stipulates that they cannot be reduced or written off except by law.
The decree amends a 1976 law governing the Future Generations Fund, which was established to invest part of Kuwait's oil wealth and fiscal surpluses for future generations.
According to the decree's explanatory memorandum, the changes are aimed at balancing the state's current financing needs with protecting the fund's assets and preserving wealth for future generations.
-- NNN-BERNAMA-XINHUA