Moody's: Kuwait Credit Rating At (A1) With Stable Outlook

5/16/2024 3:05:38 PM

(MENAFN- Kuwait News Agency (KUNA)) KUWAIT, May 16 (KUNA) -- Credit rating agency, Moody's, confirmed Thursday State of Kuwait's credit rating at (A1) with a stable outlook, saying it could raise rating if economic and financial reforms were implemented to reduce dependence on oil revenues.
Moody's, in a statement about Kuwait's rating, said the State of Kuwait's rating reflected solid budget and financial buffers in foreseeable future because of maintaining economic stability.
However, the credit rating was opposed by lack of progress in reforms, which could reduce impacts resulted from fluctuating oil markets coupled with carbon emission reduction policies and long-term energy transformation.
It projected the budget and financial reserves to remain strong in foreseeable future, which would further strengthen Kuwait's credit rating.
It projected financial assets to remain high for years to come, noting that assets of Future Generations Fund (FGF) were 400 percent of the gross domestic product (GDP) by end of 2023, amongst the highest in the world.
Moody's expected FGF's assets to grow due to rise in global assets' prices, in addition to lack of a mechanism that enabled Kuwait's authorities to transfer these assets to the budget of the state of the General Reserve Fund (GRF).
It said public debt was below three percent of GDP by end of fiscal year 2023-24, one of the lowest in the world, partially due to expiry of public debts reforms law in 2017.
Moody's said burden of debts would increase if a new public debts law was passed, while projecting 4-7 percent budget defict of DGP in fiscal years 2024-27.
It said Kuwait's huge reserve of foreign assets greatly minimized risks because the national currency, Dinar, was begged to a basket of currencies.
The Central Bank of Kuwait's monetary policies, which depended on basket of currencies, represented a solid foundation for financial stability and prevention of impacts of inflation.
More than 90 percent of Kuwait's exports and revenues come from oil, it said, which exposed the Gulf nation to fluctuation of oil prices, carbon policies and long-term energy transformation.
Moody's said it could raise the credit rating of Kuwait if the country implemented economic and financial reforms to reduce dependence on oil revenues, which would boost flexibility of credit rating vis-a-vis oil prices' fluctuations.
The execution of projects will diversify the economy, especially in transport, logistic services, petrochemicals, data centers and renewable energy.
However, Moody's said it may decrease the credit rating if financial and economic reforms were delayed. (end)
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