Kuwait’s 2026-2027 budget commits about KD3 billion (roughly USD 10 billion) to capital spending on infrastructure, funding 117 new projects and continuing work on 551 already under construction, even as the state braces for its widest fiscal shortfall in years. The plan, covering the fiscal year that began on 1 April 2026, signals that the government intends to keep building through a period of weaker oil income rather than pausing development.
A bigger deficit, but more money for projects
Finance Minister Yaqoub Al-Refaei set total expected revenues at KD16.3 billion, a 10.5 percent decline on the previous year, against total expenditure of KD26.1 billion. That leaves a projected deficit of KD9.8 billion (about USD 31.9 billion) a 54.7 percent jump. The gap is driven largely by softer oil earnings: oil revenues were budgeted at KD12.8 billion, a 16.3 percent contraction, while non-oil revenues were pencilled in 19.6 percent higher at KD3.5 billion.
Despite the strain, capital spending rose to KD3 billion, more than a third above the prior year and equal to about 11.8 percent of total outlays. Salaries and subsidies still dominate the budget at around 76 percent of expenditure, a structural feature Kuwait has long flagged for reform.
What is being built
The Ministry of Public Works received a significant allocation to advance several flagship works. Officials named the following as priority initiatives:
- Mubarak Al-Kabeer Port a major deep-water port on Boubyan Island central to Kuwait’s trade and logistics ambitions.
- Kuwait International Airport Terminal 2 expansion the long-awaited upgrade to boost passenger capacity and aviation competitiveness.
- Umm Al-Hayman wastewater plant expansion and the Kabd treatment facility, addressing utilities and urban capacity.
- A cancer control center under the health ministry, among social-infrastructure commitments.
The budget also provides for 14,518 new public-sector positions, underlining the state’s continued role as the main employer for Kuwaiti nationals.
Why the deficit is manageable
Kuwait’s fiscal break-even oil price is estimated near USD 90 a barrel, well above prevailing market levels, which is what pushes the headline budget into deficit. Yet the country enters this cycle with unusual financial firepower. Its sovereign wealth reserves, held through the Future Generations Fund, exceed one trillion dollars, and in March 2025 parliament passed a Financing and Liquidity Law allowing the government to borrow again after an eight-year gap. That law permits debt issuance of up to KD30 billion (about USD 98 billion) with maturities stretching to 50 years.
Since the law’s relaunch, Kuwait has returned to both domestic and international debt markets, with multiple bond sales in 2026 used to fund the fiscal gap and deepen its capital markets. Rather than drawing down its long-term savings, the government is using borrowing to smooth spending while oil revenues are soft an approach the IMF has broadly endorsed, provided Kuwait pairs it with gradual fiscal consolidation.
What it means for residents and business
For the private sector, the KD3 billion capital programme is the headline opportunity. Contractors, engineering firms, logistics operators and suppliers stand to benefit from port, airport and utilities work, and sustained project flow tends to support jobs, tenancy demand and services spending across the economy. Banks are also positioned to gain: the Central Bank of Kuwait issued a stimulus package earlier in 2026 aimed at keeping credit flowing to energy, utilities, transport and urban development.
For residents and expatriates, continued airport and infrastructure investment points to improving public services over the medium term, though the reliance on borrowing and the discussion of new revenue measures such as a corporate income tax and a future GCC-wide VAT are worth watching for their eventual impact on prices and business costs. Anyone planning a move or renewal should review current entry rules in our Kuwait visa and residency 2026 guide, and budget realistically using our Kuwait cost of living guide.
Outlook
Analysts expect Kuwait’s economy to strengthen in 2026, with real GDP forecast to grow around 3.8 percent as OPEC+ production cuts unwind and non-oil sectors expand. The 2026-2027 budget reflects a deliberate bet: keep capital investment rising to support diversification under Vision 2035, and finance the resulting gap through debt rather than austerity. Execution now becomes the test whether the 117 new projects move from budget lines to built assets on schedule.
