Kuwait said Sunday it plans to tap the international debt market through bond issues to finance its budget deficit after recording a first shortfall in 16 years.

The oil-rich Gulf state plans to ‘borrow up to three billion dinars ($10 billion) in US-denominated bonds from international markets, in both conventional and (Islamic) sukuk issuance,’ Finance Minister Anas al-Saleh told parliament.

The ministry will borrow another two billion Kuwaiti dinars ($6.6 billion) in both conventional and Islamic instruments from the domestic market, Saleh said.

It will be the country's first foreign debt in around two decades.

The borrowings will take place during the 2016/2017 fiscal year, which began April 1 and end next March 31, the minister said, without giving specific dates.

Saleh said the finance ministry has already borrowed $2.5 billion from the domestic market.

Saleh, who is also acting oil minister, said Kuwait recorded its first budget deficit of 5.5 billion dinars ($18.3 billion) in the 2015/2016 fiscal year.

Kuwait posted healthy budget surpluses for 16 consecutive fiscal years until oil prices began to slide two years ago. Oil income made up around 95 percent of public revenues.

During the surplus years, Kuwait piled up around $600 billion in its sovereign wealth fund managed by Kuwait Investment Authority in holdings mostly in the United States, Europe and Asia.

Parliament later on Sunday overwhelmingly passed the budget for 2016/2017 projecting a huge deficit due to the slump in oil prices.

Revenues were projected at 10.2 billion dinars ($33.9 billion), while spending was estimated at 18.9 billion dinars ($62.8 billion), leaving a shortfall of 8.7 billion dinars ($28.9 billion).

Oil income, calculated at a price of $35 a barrel, was projected at $29.2 billion, down by more than 60 percent of 2014/2015 crude returns before prices saw the sharp downfall.

During the debate in parliament, MPs called on the government to do more to diversify the sources of income to reduce dependence on oil.

‘For the past 60 years, we have remained under the mercy of oil... The government must search for alternatives,’ independent MP Adel al-Khorafi said.

The finance minister warned that due to the slide in oil revenues, ‘we now face serious challenges that put the stability and sustainability of our public finances at risk’.

Like its Gulf peers, Kuwait has taken some austerity measures that include liberalising prices of diesel and kerosene and plans to hike petrol prices.

Two months ago, parliament approved a law to raise heavily subsidised power and water fees but exempted citizens. Implementation is scheduled after one year.

The wage bill in the new budget is estimated at over half of total spending while subsidies account for 15 percent, said the head of parliament's budgets committee, MP Adnan Abdulsamad.

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