Law Library Stacks

Back to Regulation of Foreign Aid

Kuwait is one of the leading providers of official development assistance to developing countries, averaging 1.5% of its gross national income (GNI) for the period between 1973 and 2008, according to a study conducted by the World Bank.  Kuwait implements its development assistance program through the Kuwait Fund for Arab Economic Development.  Kuwait is also a major donor of humanitarian assistance and a participant in a number of regional and international development institutions.

I.  Introduction

A.    Official Development Assistance Figures

According to a study conducted by the World Bank, Kuwait, along with Saudi Arabia and the United Arab Emirates, played a major role in assisting developing countries in the financing of their development projects.  The official development assistance (ODA) amounts provided by the three countries during the last four decades averaged 1.5% of their gross national incomes (GNIs), a rate much higher than the United Nations target of 0.7% or the actual average provided by the Organization for Economic Co-operation and Development (OECD) member states.[1]

B.   Private Contribution Figures

Contributions from Kuwaiti private donors to developing countries are generally assumed to be substantial given the country’s wealth but no reliable figures are available in this respect. 

C.  Snapshot of Foreign Aid Activity

For the fiscal year ending March 31, 2010, Kuwait’s foreign aid activities through official development assistance covered the financing of twenty-three projects in twenty-two countries, distributed as follows:

  • Seven Arab countries
  • Seven African countries
  • Five countries in Southeast Asia and the Pacific
  • Three Asian and European countries
  • One Latin American and Caribbean countries[2]

The percentage share of the total aid was distributed among these countries as follows: 53.94% to the Arab countries, 14.55% to the African countries, 19.33% to the Southeast Asian and Pacific countries, 9.97% to the Asian and European countries, and 2.21% to the Latin American and Caribbean countries.  The sectors benefiting from these projects included energy, water and sewage, and agriculture,[3] at a total cost of 199 million Kuwaiti dinars.[4]

Back to Top

II.  Legal Framework

A.  Regulation of ODAs

1.  Overview

The Kuwait Government is a major donor of humanitarian aid.  From 2000 to 2008 it gave a total of US$221 million, ranking as the fourth highest non-Development Assistance Committee (DAC) contributor for this period.[5]

2.  Implementing Agencies

Kuwait channels its official development assistance to other countries through the Kuwait Fund for Arab Economic Development (KFAED or Fund), which is a Kuwaiti public institution whose Charter was first established by a decision issued by the Prime Minister pursuant to Law No. 35 of 1961.  Originally the mandate of the Fund was limited to assist Arab countries only.  However, the mission and scope of the Fund’s activities was broadened in 1974 to include all developing countries when Law No. 35 of 1961 was replaced by Law No. 25 of 1974.[6]

The objective of the Fund, as provided for in article 2 of Law No. 25 of 1974, is to assist the Arab and other developing countries in the development of their economies, and to provide them with loans necessary for the implementation of their development programs, in a manner consistent with the regulations issued by the Prime Minister that serves the national interests of the State of Kuwait and supports its regional and international foreign policy. 

3.  Restrictions

The assistance provided by the Fund is not subject to any specific restrictions concerning the types of projects that it finances or participates in financing.  However, due to the needs of the beneficiary countries, the focus of the assistance has been concentrated primarily on agriculture, irrigation, transport, communications, water and sewage, and energy.[7]

There is also no restriction as to which entities within the beneficiary countries can seek the Fund’s assistance.  Pursuant to article 17 of the Charter, the Fund may extend its assistance to any entity that has juridical personality, public or private, that contributes to the economic development of the beneficiary country as long as the objectives of such entities are not limited to for-profit activities only.  However, the Fund may request the beneficiary countries to be a guarantor for the implementation by the recipient entities of their obligations and the loan agreements.

The Fund’s Charter requires in particular that the agreement contain a commitment on the part of the borrowing country not to tax the assets of the Fund, to keep such assets and income free from exchange control, and not to give other foreign debt priority over the Fund’s debt.[8]  The Fund may of course impose whatever other restrictions it deems necessary as conditions in the loan agreement on a case-by-case basis. 

4.  Discretionary Aid

There are no provisions in the Law that established the Fund or in its Charter that allow it to give discretionary aid outside the norms described in the Law. 

5.  Oversight

As a public institution that enjoys an independent juridical personality, the Fund is subject to the oversight of its Board of Directors and auditors, and the general oversight of the Kuwaiti Government.

6.  Policy Considerations

Law No. 25 of 1974 authorizing the establishment of the Fund as well as its most recent Charter issued by the Prime Minister in 1981 give the board of directors of the Fund a wide discretionary power to set the conditions of the loans as it deems desirable.  Even the provision that requires the loan not to exceed 50% of the total cost of the project can be overlooked if the Board of Directors so decides.[9]

B.  Regulation of Private Contributions

It appears that private contributions are not regulated by the Kuwaiti Government.  Rather, its policy, according to a World Bank report dating from 1990, is to not be involved in such activities.[10]

Back to Top

III.  Foreign Aid Appropriations Process

In addition to the disbursement processes established by the Board of Directors of the Fund, Kuwait is a participant in a number of regional and international development institutions, such as the Arab Fund for Economic and Social Development, each of which appropriates development funds according to its own rules and processes. 

Back to Top

IV.  Other Types of ‘Aid’

No information was found as to whether Kuwait provides or regulates other types of aid in addition to its official development assistance program.

Back to Top

Prepared by Issam M. Saliba
Senior Foreign Law Specialist
October 2011

[1] Mustapha Rouis, Arab Development Assistance: Four Decades of Cooperation, MENA Knowledge and Learning Quick Notes Series (World Bank), Aug. 2010, at 1, Resources/QuickNote28-ArabODA.pdf.

[2] Kuwait Fund for Arab Economic Development [The Fund], Forty Eighth Annual Report, 2009/2010 at 16,  The number and geographic areas of the recipient countries change from year to year.

[3] Id.

[4] At the current exchange rate, one Kuwaiti dinar is equal to about US$3.67.  See KWD_USD.html#KWD=1 (last visited Aug. 26, 2011).

[5] Kuwait: Introduction, Global Humanitarian Assistance, http://www.globalhumanitarianassistance. org/countryprofile/kuwait (last visited Aug. 26, 2011).

[6] Arabic copies of Law No. 25 of 1974 and the Fund Charter are available on the Fund’s website, (in Arabic; last visited Aug. 26, 2011).

[7] Forty Eighth Annual Report, supra note 2, at 1.

[8] Fund Charter, supra note 6, art. 20.

[9] Id. arts. 18, 21.

[10] Nural Abdulhadi, The Kuwaiti NGOs: Their Role in Aid Flows to Developing Countries, para. 4 (World Bank, Working Paper No. 524, Oct. 1990), WDSP/IB/1990/10/01/000009265_3960930001418/Rendered/PDF/multi_page.pdf.

Back to Top



Last Updated: 06/09/2015