Terms Of Use Privacy Statement

Kuwait remains among strongest sovereign countries

Finance, Business Kuwait City 10 Nov 21
Kuwait remains among strongest sovereign countries
Kuwait’s public sector balance sheet will likely remain among the strongest sovereign budgets, according to Fitch.
Event Location
Kuwait, Kuwait
Kuwait City
Start Time
10 November 2021, 12:00 AM
End Time
30 November 2021, 12:00 AM

The credit rating agency “Fitch” said the negative outlook of Kuwait’s sovereign rating reflects the near-term liquidity risks associated with the imminent depletion of liquid assets in the General Reserve Fund in the absence of the government’s parliamentary mandate to borrow, reports Al-Rai daily.

Fitch said Kuwait’s public sector balance sheet will likely remain among the strongest sovereign budgets rated by the agency, even assuming little fiscal reform and no recovery in oil prices or production.

“Fitch” pointed out that without passing a law allowing the issuance of new debt, the liquidity of the General Reserve Fund could be drained in the near term without taking further measures to renew it, adding that the depletion of the fund’s liquidity would sharply limit the government’s ability to meet spending commitments and could lead to major economic disruption. However, the agency believes that a new debt law will be passed and that the government will renew the resources of the General Reserve Fund again to avoid depletion even if no new legislation is passed by the National Assembly, expressing confidence that the debt service will continue in any case in the appropriate time, however, there is still a degree of uncertainty.

Fitch expected that the fiscal deficit would halve, but it is still large at 11%, in the fiscal year ending in March 2022. It is likely that the deficit will remain within decimal places for the fiscal years 2022 and 2023, assuming that oil prices fall again to $54 per barrel on average.

Fitch pointed out that there is a significant positive aspect to these expectations in light of the dynamics of the oil market, as the increase in the oil price by $10 per barrel helps Kuwait’s budget by more than 6% of the GDP.

According to Fitch’s estimates, “the financial breakeven point for the oil price in Kuwait’s budget will drop to less than $80 a barrel in the 2022 fiscal year, due to the rise in oil production in line with the gradual (OPEC+) level, ruling out major financial reforms in Kuwait, which makes the budget vulnerable to fluctuations in oil prices.”

Kuwait finance news 2021 Kuwait Fitch ratings 2021Kuwait strongest sovereign county

Popular Events

Related Events