Kuwait Government Spending & Projects Review 2025–2027

Based on publicly available official government and authoritative press sources.

Executive Summary

Kuwait stands at a pivotal juncture. As the Gulf state with one of the world’s largest sovereign wealth funds — the Kuwait Investment Authority (KIA) manages assets estimated at USD 969 billion — the country is simultaneously grappling with structural fiscal imbalances and accelerating a long-overdue infrastructure investment drive under its Vision 2035 (‘New Kuwait’) development blueprint.

Two consecutive budgets — FY 2025/2026 and FY 2026/2027 — tell a story of growing deficits driven by lower oil prices and rising public sector wages, but also a sharp increase in capital expenditure. The FY 2026/2027 budget raises capital spending by 36.8% to KD 3.1 billion (approximately USD 10 billion), directing the bulk toward the Kuwait International Airport expansion, Mubarak Al-Kabeer Port, and a sweeping energy infrastructure build-out of 14 GW of new power and water capacity by 2031.

Key Budget Figures at a Glance

1. The Budget Framework: FY 2025/2026 and FY 2026/2027

1.1 Kuwait’s Fiscal Year

Kuwait operates on an April-to-March fiscal year. This review covers FY 2025/2026 (April 2025–March 2026), which is in its final quarter, and the freshly approved FY 2026/2027 budget (April 2026–March 2027), unveiled by Finance Minister Dr Yaqoub Al-Refai in February 2026. Unusually for a Gulf state, Kuwait’s budget is often approved after the fiscal year has begun — and actual outcomes frequently diverge significantly from forecasts.

1.2 FY 2025/2026 Budget

The FY 2025/2026 budget was approved in April 2025 and projects total expenditure of KD 24.538 billion. Total revenues are projected at KD 18.231 billion, based on an oil price assumption of USD 68/barrel and production of 2.50 million barrels per day. The deficit is KD 6.31 billion (approximately 13% of GDP). Capital expenditure stands at KD 1.7 billion, including KD 428 million earmarked specifically for infrastructure.

The 2025/2026 budget listed 69 new projects for ministries, 21 for affiliated entities, and 34 for independent institutions, alongside 373 continuing or under-execution ventures. Key continuing projects include: expansion of Umm Al-Haiman power station; construction of airport Terminal T-2 (targeted completion 2027); and the first phase of Mubarak Al-Kabeer Port (targeted completion 2028).

1.3 FY 2026/2027 Budget

The FY 2026/2027 budget — approved by Cabinet in February 2026 — is the most significant of the two in terms of capital deployment. Total expenditure stands at KD 26.1 billion, a 6.2% increase and one of the highest levels in Kuwait’s history. The deficit is KD 9.8 billion (~USD 32 billion) — the third-largest since Kuwait’s liberation in 1991. Capital expenditure rises to KD 3.1 billion (~USD 10 billion) — a 36.8% increase — directed primarily at airport expansion, Mubarak Al-Kabeer Port, and water and power projects. The budget covers 117 new projects and 551 projects already under construction as of April 2026.

1.4 The Fiscal Challenge

Kuwait’s structural fiscal position is challenging and widely acknowledged. The IMF estimates Kuwait’s fiscal breakeven oil price at approximately USD 90.5/barrel. Key structural issues include: wage dependency (~KD 15–16 billion in salary payments annually); a subsidy burden of nearly KD 4 billion; low capital expenditure share (only 11.8% of total expenditure); and non-oil revenues at just 21% of total. The government is actively pursuing fiscal reforms, including a new public debt law targeting a KD 30 billion debt ceiling with bonds of up to 50-year tenor.

2. Vision 2035: ‘New Kuwait’ — The Strategic Framework

Kuwait’s national development strategy, ‘New Kuwait Vision 2035,’ aims to transform the country from an oil-dependent welfare state into a financial and trade hub at the crossroads of Asia, Europe, and Africa. The vision is structured around five pillars: building a diversified and sustainable economy; developing human capital; creating a high-quality living environment; strengthening government performance; and fostering international standing.

A revised version of Vision 2035 was unveiled in August 2025, with renewed focus on accelerating delivery of critical infrastructure projects, reducing reliance on the state budget by attracting foreign capital (targeting USD 32 billion in foreign investment), and strengthening development partnerships — particularly with China and Japan.

3. Energy & Water Infrastructure — A 14 GW Build-Out

Kuwait faces a chronic and worsening power and water shortage driven by rapid population growth, soaring summer temperatures, ageing plant, and years of under-investment. The government has launched the most ambitious energy infrastructure programme in the country’s history — targeting 14 GW of new power generation and hundreds of millions of gallons per day of new desalinated water by 2031.

3.1 Az-Zour North IWPP Phases 2 & 3 — USD 4 billion

Kuwait’s first major energy PPP in years, located approximately 100 km south of Kuwait City. Capacity: 2,700 MW of power and 120 million imperial gallons per day (MIGD) of desalinated water. Cost: KD 1.2 billion (~USD 3.9–4 billion). Consortium: ACWA Power and Gulf Investment Corporation — contract signed August 2025. Timeline: Targeted completion by 2029. Structure: Build-Own-Operate-Transfer (BOOT) PPP model under KAPP.

3.2 Al-Khairan IWPP Phase 1 — 1,800 MW

Bidding for the first phase of the Al-Khairan Integrated Water and Power Project opened to pre-qualified consortiums in September 2025. Capacity: 1,800 MW of power generation. Model: Public-private partnership under KAPP. Status: Bidding in progress; contract award expected 2026.

3.3 Nuwaiseeb IWPP — 7,200 MW (Two Phases)

The most ambitious of Kuwait’s energy projects by scale, approved by Cabinet in October 2025 for development under the IWPP model. Total design capacity: 7,200 MW of electricity and 180 MIGD of water — across two phases. Phase 1: 3,600 MW combined cycle; construction to begin 2027; commercial operation targeted for 2028 (initial phase). KAPP authorised to launch tender process.

3.4 Shagaya Renewable Energy Project

Kuwait’s long-delayed renewable energy programme is being revived under a PPP framework. Phases 1 & 2: Combined 1.6 GW solar capacity — bidding underway under a PPP model. Phases 3 & 4: Additional 3 GW — to be built in cooperation with Chinese state enterprises. Kuwait’s overarching target is 15% renewable energy in its grid mix by 2030.

3.5 Other Energy & Water Projects

• Kabd Wastewater Treatment Plant: USD 489 million contract awarded to Turkey’s Kuzu Group in October 2025.
• Kuwait Oil Company Water Injection: Petrofac submitted the lowest bid for a USD 1.4 billion water injection project (October 2025).
• GCC Power Grid Expansion: USD 260 million project to expand the GCCIA–Kuwait interconnection to approximately 3,000 MW transfer capacity.

4. Transport & Connectivity Infrastructure

4.1 Kuwait International Airport — Terminal T-2

Target capacity: 25 million passengers annually (up from the current ~14 million). Status: Under active construction. Target completion: 2027. In June 2025, TK Elevator secured a key contract covering supply, installation, and two-year maintenance of 55 passenger boarding bridges. The airport expansion is explicitly named by Finance Minister Al-Refai as one of the three primary recipients of the FY 2026/2027 capital expenditure increase.

4.2 Mubarak Al-Kabeer Port — Bubiyan Island

The single most strategically significant infrastructure project in Kuwait. Location: Eastern side of Bubiyan Island, 1,161 hectares, with direct access to the Khor Abdullah waterway — outside the Strait of Hormuz chokepoint. Total cost: Approximately KD 990 million (~USD 3.25 billion) for Phase 1 completion; China Communications Construction Company (CCCC) signed as EPC contractor in December 2025. Capacity (on full completion): Over 8 million TEUs annually. Timeline: First phase approximately 50% complete as of late 2025; targeted for completion by end 2026–2028.

4.3 Kuwait National Railroad Network (KNRR)

A planned 265-kilometre double-track national railway connecting Kuwait City to Nuwaiseeb and Bubiyan Port, budgeted at approximately KD 920 million (~USD 3 billion). Status: In design phase. The consultant is expected to submit final designs, paving the way for implementation with targeted completion between December 2028 and 2030. The railway will connect Kuwait to the broader GCC Railway network, with a high-speed rail line planned linking Kuwait to Riyadh via the Nuwaiseeb border crossing.

5. Mega Urban & Mixed-Use Projects

5.1 Madinat Al-Hareer (Silk City) — USD 132 Billion

One of the largest and most ambitious urban development concepts in the world. Location: Subiya, northern Kuwait. Scale: 250 sq km planned city. Estimated cost: USD 132 billion over a 25-year development timeline (2024–2040). Developer: Tamdeen Group in collaboration with Ajiyal Real Estate. Population target: 700,000 residents; approximately 450,000 jobs. Signature feature: Burj Mubarak Al-Kabir — a planned 1,001-metre supertall tower designed by architect Santiago Calatrava, with 234 floors.

5.2 Kuwait Five Islands Development

A major maritime tourism and economic development project transforming five offshore islands — Failaka, Boubyan, Warba, Miskan, and Auhah — into tourism, logistics, and investment destinations. Combined investment: Hundreds of billions of Kuwaiti dinars. Failaka Island is the most tourism-ready, featuring ancient Greek ruins and development plans for luxury resorts.

5.3 Housing Cities

Kuwait’s Public Authority for Housing Welfare (PAHW) is overseeing construction of multiple new residential cities to address a housing backlog of over 105,000 pending applications:

• South Al-Mutlaa City: 20,000 housing units; under active construction; 68 public buildings under construction within the city.
• North Mutlaa: Larger complementary development targeting 52,000 units.
• South Saad Al-Abdullah City: 6,800 units; under construction; targeted completion Q2 2029.
• South Sabah Al-Ahmad Residential City: 2,300 units; under construction; targeted completion Q3 2029.

6. Social Sector Spending

6.1 Education

Education is among Kuwait’s core budget commitments, receiving substantial ongoing allocations for new school construction, university expansion (Al-Sabah University is under active construction; Kuwait University expansions ongoing), and digital transformation. The Vision 2035 knowledge economy agenda drives investment in e-learning infrastructure and technology integration.

6.2 Healthcare

Health sector investment is a stated priority, with projects including Al-Addan Hospital expansion, Shuwaikh Children’s Hospital (under design), and a New Medical City in planning stages. Healthcare projects have historically been among those most affected by project delays in Kuwait.

6.3 Subsidies and Social Protection

Kuwait maintains one of the most generous subsidy regimes in the world, with approximately KD 3.96 billion (FY 2025/2026) allocated to subsidies for energy, water, and food. The government has indicated it wishes to reform these gradually, likely phased rather than abrupt, citing the Saudi Arabia and UAE models of targeted subsidy replacement.

7. Major Projects Summary

8. What This Means for Foreign Contractors and Suppliers

Kuwait’s procurement environment in 2026 is, in many respects, the most open of any GCC state to foreign contractors and suppliers — but it is also the most operationally challenging. Domestic construction and EPC capacity is thinner than in Saudi Arabia or the UAE, and almost every major project of the past decade has been delivered by international consortia. At the same time, Kuwait’s administrative culture, slow payment cycles, and historically lengthy approvals process have repeatedly tested even experienced regional contractors.

8.1 Power and Water: The Largest Foreign Opportunity in a Generation

The 14 GW power and water build-out under KAPP is the single most attractive opportunity in Kuwait for international firms over the 2026–2030 window. Az-Zour North Phases 2&3, Al-Khairan Phase 1 (currently in bid), and the 7.2 GW Nuwaiseeb programme will require sustained participation from international IPP developers, gas-turbine OEMs (GE Vernova, Siemens Energy, Mitsubishi Power), desalination technology providers (Acciona, Veolia, IDE, Doosan), and project-finance arrangers. Kuwait’s BOOT PPP model under KAPP makes this segment structurally similar to the IWPP markets in Saudi Arabia and Oman.

8.2 Ports, Maritime Logistics and the China Question

The signing of the EPC contract for Mubarak Al-Kabeer Port with CCCC in December 2025 confirmed Kuwait’s positioning as a Belt and Road Initiative anchor state. Phases 2 and 3 remain open and will require substantial international participation in container-handling equipment (Konecranes, Liebherr, Kalmar, ZPMC), port operating systems, marine works specialists, and dredging contractors (Boskalis, Van Oord, Jan De Nul). Non-Chinese firms should position around technology and operational expertise rather than head-to-head civil-works competition.

8.3 Aviation: Terminal T-2 and Beyond

Limak (Turkey) is the lead contractor on Terminal T-2, targeted completion in 2027. The remaining foreign opportunity sits in airport systems and fit-out: baggage handling, passenger boarding bridges, airport IT, security and biometrics, retail and F&B concessions, and operational readiness consulting. Given Kuwait’s ambition to grow passenger throughput beyond 25 million, a successor capacity-expansion programme is likely to be tendered before T-2 reaches design capacity.

8.4 Rail: The Long Game Worth Tracking

The Kuwait National Railroad (265 km, ~USD 3 billion) and the Kuwait segment of the GCC Railway (111 km) remain in final design as of mid-2026, with implementation targeted for 2028–2030. International rail engineering firms (Systra, Mott MacDonald, Egis), rolling-stock OEMs (Alstom, Siemens Mobility, CRRC, Hyundai Rotem), and signalling specialists should be pre-qualifying now. Realistic firms should plan around Kuwaiti project delivery being slower than headline schedules suggest.

8.5 Strategic Posture for 2026–2028

Three propositions apply for international firms approaching Kuwait. First, the KAPP-led PPP framework is the cleanest entry route and the most internationally familiar. Second, Kuwait’s project-delivery culture remains demonstrably slower than Saudi Arabia or the UAE — commercial models and working capital should all be calibrated accordingly. Third, Chinese state contractor positioning under the BRI framework is now a structural feature — non-Chinese firms should compete on technology, advisory and specialist services where the differentiation is clearest.

9. Conclusion

Kuwait’s development story is one of immense potential constrained by structural challenges — and a government now moving with greater pace to bridge the gap. Capital spending is up 36.8%, non-oil revenues are up 19.6%, an EPC contract is finally signed for Mubarak Al-Kabeer Port, a new airport terminal is advancing to completion, and the largest energy investment programme in Kuwait’s history is underway. The removal of legislative gridlock since mid-2024 has materially improved project execution momentum.

The risks are also real. Project delivery historically lags targets in Kuwait by years, driven by procurement, regulatory, and administrative bottlenecks. Subsidy reform is politically sensitive. And the fiscal position depends on oil prices. For investors, contractors, and analysts, the 2025–2030 period represents the most active capital deployment window in Kuwait in a generation.

Sources & References

All information in this report is drawn from publicly available, authoritative sources:

• Kuwait Ministry of Finance — mof.gov.kw
• Kuwait Government Online — e.gov.kw
• Kuwait Times — kuwaittimes.com
• Times Kuwait — timeskuwait.com
• Arab News — arabnews.com
• Arab Gulf Business Intelligence (AGBI) — agbi.com
• Zawya — zawya.com
• Smart Water Magazine — smartwatermagazine.com
• Blackridge Research — blackridgeresearch.com
• GCC Interconnection Authority — gccia.com.sa

This report is compiled from publicly available official and credible press sources as of May 2026. All figures are as reported at time of publication. Currency conversions are approximate (1 USD ≈ 0.307 KWD). Kuwait’s fiscal year runs April 1 to March 31. © 2025 GCC Tender News.