Kuwait has started work on a KD2.9bn ($9.6bn) sovereign bond to be issued before the end of March 2017, according to local newspaper Al-Qabas.

“Kuwait will borrow through an international, foreign currency-denominated, sovereign bond issuance, with the aim of closing the fiscal deficit, and diversifying the state’s budget financing, and also to establish a yield curve for the private sector to price its borrowing,” said Finance Minister Anas al-Saleh.

Kuwait can borrow up to KD2.9bn in US dollars in the budget year 2016-17, which ends on 31 March, Al-Saleh decreed.

The Finance Ministry will appoint external arrangers, although news agency Reuters reported in October that requests for proposals had not yet been issued to potential banks.

Kuwait had been expected to issue about KD3bn for the last year, to plug a budget deficit that the IMF estimates at 3.6 per cent of GDP in 2016, returning to a surplus in 2017. Saudi Arabia’s highly anticipated $17.5bn international bond issuance, new parliamentary elections in Kuwait and the slow pace of reforms there could all have contributed to the slow progress.

Banks and other investors also begin closing annual accounts in November, and bond issuance levels for the last two months of the year are generally depressed.