Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Fitch Affirms Kuwait's Rating at “AA-” with Stable Outlook

Sun 17 Mar 2024 | 04:39 AM
Taarek Refaat

Fitch decided to affirm its rating on Kuwait's ability to meet long-term obligations in foreign currency at (AA-) with a stable outlook.

The agency stated in a statement that its credit rating for Kuwait was supported by the strength of its budget and the balance of its foreign transactions, but it is still restricted in light of factors including its heavy dependence on oil and the large size of the public sector, which is difficult to sustain in the long term.

The agency added that among the restrictions are the factors hindering efforts to address the ongoing financial and economic stagnation, approving legislation related to sources of financing, and allowing the issuance of debt, quoting the Arab World News Agency.

Kuwait did not issue any debt instruments since the expiration of the public debt law in the last quarter of 2017. It submitted a draft law for public debt to the National Assembly, but it was not accepted by the representatives. The new government in Kuwait put forward a proposed law within its work program that specializes in ... Liquidity tools.

Fitch expects that the state’s general budget will return to recording a deficit of 5% of GDP during the current fiscal year 2023/24, without taking into account government investment income, and the deficit rate will rise to 6.5% in the fiscal year 2024/25 and 10% in 2025/26, with the decline in oil prices, continued public spending pressures, and continued limited progress in reforming public finances.

The agency indicated that the ratio of total government debt to GDP is still low at 3.1% in the 2023/24 fiscal year.