Kuwait’s economic overhaul fuels optimism for growth

There’s optimism in Kuwait, buoyed by a sweeping legal and regulatory overhaul since Emir Sheikh Meshal Al-Ahmad dissolved Parliament in May.

Stocks are up 10% this year, the sovereign wealth fund has surpassed the $1 trillion mark in assets under management, and crucial economic laws — debated for decades — are being enacted. Investors seem to be betting that autocracy might deliver what nascent democratic institutions couldn’t: stable growth.

This week, Kuwait passed a debt law allowing it to raise up to $97 billion over 50 years — an important tool as it expects fiscal deficits to continue after two years of contraction. Bank stocks also got a boost on expectations that mortgage lending will finally be allowed. Until now, home loans weren’t offered by banks: Married citizens applied to a government program that has a backlog of 103,000 requests, translating to a 10-year wait, according to Bloomberg.

Critics warn, however, of an erosion of freedoms. Human rights groups say political opponents are being swept up in a purge targeting 42,000 Kuwaitis accused of obtaining nationality illegally.