Kuwait intends to borrow $ 15 billion from "generational reserve"

Kuwait is heading to government financing arrangements according to Moody's credit rating agency, but the vision is still unclear in this regard, which is the reason that led it to lower the sovereign rating to (A- This makes it difficult to anticipate the potential impact.

and according to Arabnet, citing Moody's, that the General Investment Authority is expected to authorize the General Reserve Fund to sell additional shares of its dwindling group of illiquid assets to the Al-Ajyal Fund. Next.

The agency said that the Future Generations Reserve Fund, which is another savings tool that possesses the majority of government savings, is not available to finance the general budget, noting that in light of the exhaustion of most The assets of the General Reserve Fund, according to Al-Anbaa newspaper.

Moody's estimates these assets at a maximum of $ 15 billion to cover budget expenditures, which will cover less than half of the projected funding requirements for the next fiscal year. As such, It expects that the government will resort to taking additional measures to avoid the financing crisis, which could include passing the long-awaited debt law or amending the existing legal framework to allow a portion of investment income from the Future Generations Fund to be transferred to the General Reserve Fund.

You estimate that the liquid portion of the assets in the General Reserve Fund - the smaller stabilization fund - has been largely depleted, but some additional liquidity could be provided by selling the remaining stake Of illiquid assets - which we estimate at 12% of GDP as in February 2021 for the Future Generations Fund.

and if the law is amended to allow access to the assets of the aforementioned fund for budgetary purposes, the overall level of the assets of the SWF will decrease in the medium term in the absence of a new debt law.

Otherwise, the agency said that if the government passes a new debt law but maintains the current legislative framework for the Future Generations Fund, the level of the sovereign wealth fund's assets is likely to rise. Debt will rise very sharply.

A compromise whereby a portion of FGF investment income is transferred to the budget in conjunction with a new debt law could preserve the assets of the sovereign wealth fund and slow down debt accumulation However, it will not cancel it, according to Moody's.

and she said: We estimate that the volume of sovereign assets held in the FGF is very large, amounting to 391% of GDP.