Experts support borrowing from Future Generations Fund but urge restraint

Kuwait has authorized regulated borrowing from its Future Generations Fund, presenting the measure as a tool to protect financial stability without building up excessive public debt. Economists interviewed by the Arab Times supported the approach, but stressed that it must be used with discipline.

Dr. Sadiq Al-Bassam, head of the Accounting Department at Kuwait University, described the move as a strategic financial instrument. Drawing on the sovereign wealth fund could provide liquidity for budget deficits and major development projects without sending Kuwait to international markets for loans.

But Al-Bassam also called the policy a double-edged sword. Liquidating essential investment assets could carry long-term costs, including the loss of opportunities in international markets and damage to the fund’s financial solvency. He urged the government to avoid excessive borrowing and preserve the fund’s future value.

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This measure is a double-edged sword.

Kuwaiti economic expert Sultan Al-Jazzaf said the government’s main goal was to maintain domestic financial stability. He pointed to the risk that hostilities involving the United States, Israel and Iran could contribute to fiscal deficits, while a halt in oil exports could reduce state revenues.

Al-Jazzaf argued that using sovereign wealth resources would give decision-makers more flexibility in managing public debt and directing returns toward development projects. He also cited savings from avoiding high compound interest paid to foreign lenders, along with the possibility of channeling funds into domestic investments and infrastructure that could diversify national income and create jobs. The article said the new law rests on legislative and economic measures intended to support state liquidity and address imbalances in the public budget.

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The primary objective of the government in borrowing from the fund is to maintain domestic financial stability.