UPDATE: How Kuwait's Government Sukuk Programme Will Work

Kuwait's Government Sukuk Law is now in force. Decree-Law No. 90 of 2026 was published in Kuwait Al-Youm Issue 1809 on Sunday 20 September 2026 and applies from that date, two weeks after the Cabinet approved the draft on 1 September. When we covered the draft, the text was unpublished and the key design choices were unknown. The gazetted law answers them, and this article walks through what it actually builds.

Why this matters: Kuwait's return to the debt markets has so far been conventional: everything issued under the Financing and Liquidity Law, Decree-Law 60/2025, including the July 2026 benchmark bond, sits on the conventional side. Islamic banks and sharia-compliant funds, which hold a large share of local liquidity, could not participate. Sukuk are certificates that give the holder a share in an underlying asset and its returns instead of interest on a loan, and a sovereign sukuk programme opens government funding to that pool, in dinars and in foreign currency, at home and abroad.

One company, one board, one register

The machinery is deliberately self-contained. The State issues through a special purpose company, a single-shareholder company wholly owned by the State whose only business is to hold the sukuk assets, divide them into equal units and issue the certificates. The company may, with the Minister of Finance's approval, delegate issuance and management tasks, and it appoints a custodian to hold the assets and an investment manager to run them. The investment manager answers to the holders for actual damage caused by breaking the law, misusing its powers, negligence or breaching the issue terms, and it must disclose anything that materially affects the value of the sukuk along with its risk assessments, under rules the prospectus sets out.

Sharia governance is centralised: the Minister appoints a single Fatwa and Sharia Supervision Board for all special purpose companies, at least three specialists in Islamic finance jurisprudence, one of them a member of the Central Bank's Higher Sharia Supervisory Authority. That one board rules on every sharia aspect of every issue, which should spare the programme the fragmented fatwa risk private sukuk sometimes carry. Sukuk are registered electronically at nominal value, each issue has its own financial year, and an auditor appointed by the Minister watches the company and the assets. Subscription terms may also give holders the right to form a holders' body with legal standing to protect their common interests.

What can back the sukuk, and what cannot

Sukuk assets are State-owned assets, existing or defined for future delivery: tangibles, usufructs, operating rights, services or a mix, or the assets of a specific project or investment activity. Three things are off the table: natural resources, public utilities and assets allocated to public use. The Council of Ministers decides which assets are used, and the explanatory memorandum sketches the contract menu that follows from them: ijara sukuk over existing government assets or their usufructs, salam and istisnaa where assets are to be delivered or built, and mudaraba or musharaka structures for new government development projects.

Where the CMA fits, and where it does not

Article 32 disapplies the Capital Markets Authority Law and its executive bylaws from the issuance, offering and management of government sukuk. There is no CMA prospectus approval; disclosure runs through the subscription prospectus the law itself requires. The exchange is not out of the picture, though: government sukuk may be listed on the local exchange under CMA rules with the Minister's approval, or on foreign markets under those markets' rules. Boursa Kuwait's bonds and sukuk platform, operational since June, is the natural venue.

Money limits and the clock

The programme does not create new borrowing room. Values, tenors and use of proceeds must respect Decree-Law 60/2025, so sukuk issuance counts inside the existing public debt framework, and refinancing existing debt is one of the stated purposes. The General Reserve Fund carries the costs of implementation. The one hard deadline: the Cabinet must issue the executive regulations within three months of publication, on the Minister of Finance's proposal, which points to regulations by around late December 2026 and a first issuance window after that.

What to do now

Islamic banks and investment companies should review treasury mandates and sharia-board approvals so government sukuk are an eligible asset class on day one, and firms that want underwriter, custodian or investment manager roles should watch the executive regulations, which will name who qualifies. Corporate treasurers get a new low-risk dinar instrument to sit alongside bank deposits. Retail and professional investors should wait for the prospectus of the first issue and read the risk and disclosure sections carefully, keeping in mind that the CMA regime does not apply to these instruments.

WEFAQ's view: the law is complete, flexible and quick to activate. The open variables are the executive regulations and the first asset designation, and both sit with the Cabinet. Institutions that prepare in the next three months will be the ones ready to participate when the first issue prices.

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Source: Decree-Law No. 90 of 2026 on Government Sukuk, Kuwait Al-Youm Official Gazette, Issue 1809, 20 September 2026; Decree-Law No. 60 of 2025 on Financing and Liquidity.

This article is provided for general information only and does not constitute legal advice. For advice specific to your circumstances, please contact WEFAQ Law Firm.