How Pinched Is OPEC? -- July 3, 2016

Bloomberg is reporting that Kuwait plans to raise nearly $15 billion to help plug its budget deficit as lower oil price squeezes public finances:

• as much as $9.9 billion from international debt markets
• to borrow $6.6 billion from the domestic market 

The plunge in oil prices has prompted a flurry of international bond sales from the six-nation Gulf Cooperation Council to finance widening deficits that could reach $900 billion by 2021.

Qatar raised record a $9 billion in May, following a $5 billion sale by Abu Dhabi. Saudi Arabia, the biggest Arab economy, has hired JPMorgan Chase & Co., HSBC Holdings Plc and Citigroup Inc. to raise at least $10 billion, according to people familiar with the matter.

It sounds like the Kuwaitis are tapping the US bond market in preference to London due to recent Brexit vote.

The article suggests that this is simply the beginning of such borrowing and it will go on for some time.

Kuwait estimates expenditure for the 2016-17 fiscal year at 18.9 billion dinars, the minister said, while revenue is expected to be at 10.4 billion dinars during the same period. Non-oil revenue will make up 1.6 billion dinars of the total.

Kuwait posted a 5.5 billion dinar deficit for the 2015-2016 fiscal year below the government’s earlier estimate of 8.2 billion. The government hired consulting firm Oliver Wyman & Co. to advise on a debt strategy, the minister said in an interview in May.

 One may be interested in learning a bit about Oliver Wyman.

$900 billion. Sounds close to a trillion. I guess that's why they call it the "trillion-dollar mistake."

This is the Islamic view on lending: