Kuwait's government plans to issue KD2 billion ($6.6 billion) of Islamic and conventional bonds to help cover a budget deficit created by low oil prices, Al Arabiya television quoted unnamed official sources as saying on Monday.

The finance ministry has asked the central bank to arrange the issuance, Al Arabiya said. It did not specify the timing beyond saying the issuance would occur this year.

The government has begun drawing down its financial reserves to cover part of the deficit, which it projects at KD12.2 billion in the current fiscal year that began on April 1. But it also wants to start issuing debt to limit the speed of the drawdown and develop the local financial market.

The 2 billion dinar issuance will be divided equally between conventional and Islamic bonds (sukuk), and a total of KD6 billion of the deficit will eventually be covered by bond issues with the rest covered by reserve drawdowns, Al Arabiya reported.

Finance minister Anas al-Saleh said last month that Kuwait was talking to its advisers about a potential sovereign bond issue, and was considering both domestic and international debt issues. – Reuters