RIYADH: Kuwait’s government is set to borrow from the country’s sovereign wealth fund, which has more than $1 trillion in assets, to support public finances as Gulf economies grapple with the fallout from the US war on Iran. The new decree, proposed to support the general reserve fund, amends a 1976 law governing the sovereign wealth fund known as the Future Generations Reserve Fund, which is managed by the Kuwait Investment Authority. Kuwait’s Future Generations Fund is a long-term sovereign savings fund designed to preserve and grow part of the country's wealth for future generations. It invests globally across a range of assets and serves as a financial buffer for Kuwait beyond its reliance on oil revenues. Kuwait first tapped the fund, established as a savings vehicle for the post-oil era, in 1990, when Iraq invaded and occupied the country for about seven months. Withdrawals from the fund require new legislative authority. Under the decree, published in the official gazette on Sept. 1, any loan taken from the fund must be repaid once the state budget posts a surplus, with repayment given priority. It also states that the loan cannot be written off under any circumstances, except under powers granted by new legislation, among other conditions imposed on the borrowing arrangement. Borrowing limits The Kuwait Investment Authority was also granted the power to use the financial, investment and financing tools necessary to manage the fund's assets, with investment returns to be added to the account. Borrowing is subject to three main restrictions. Total loans in a single fiscal year cannot exceed 100 percent of the average returns generated by the reserve over the last five audited fiscal years, and the outstanding balance of accumulated loans cannot exceed 10 percent of the reserve's net asset value based on its audited financial accounts for the most recent fiscal year. New loans are prohibited whenever either cap is exceeded, and the ban is lifted only once the borrowing ratio falls back within the set limits. The amendment is meant to give the state an organized borrowing mechanism while protecting the fund's principal from direct or unregulated withdrawals, according to the decree's explanatory memorandum. The move comes weeks after Fitch Ratings affirmed Kuwait's AA- sovereign credit rating with a stable outlook in August, citing exceptionally strong fiscal and external balance sheets despite rising regional geopolitical risks. The agency said Kuwait's vast sovereign wealth assets and external buffers remain among the strongest of any Fitch-rated sovereign. Fitch forecasts Kuwait's sovereign net foreign assets will rise to 668 percent of gross domestic product in 2026, from an estimated 652 percent in 2025, more than 10 times the median for AA-rated sovereigns. Most of these assets are held in the Future Generations Fund managed by the Kuwait Investment Authority.