Fitch Ratings confirms Kuwait’s rating at AA- with stable outlook
Date
9/15/2024 7:58:24 AM
(MENAFN) On Friday, Fitch Ratings announced that it has reaffirmed Kuwait's long-term foreign currency issuer default rating at AA- with a stable outlook. This decision reflects Kuwait's robust fiscal and external balance sheets, which continue to support its high credit rating. Despite these strengths, the rating agency noted that Kuwait faces several challenges that balance out its favorable fiscal position.
Fitch highlighted that Kuwait's governance is weaker compared to other countries with similar ratings. The nation's heavy reliance on oil revenues, coupled with its extensive welfare system and large public sector, poses significant sustainability concerns over the long term. These factors contribute to the complexities of maintaining Kuwait's current rating in the face of fluctuating oil prices and economic pressures.
The agency expects Kuwait's revenue to decline in the near future, although there may be a modest increase in non-oil revenue. The impact of falling oil prices is somewhat mitigated by the potential easing of OPEC+ oil production quotas in the fourth quarter of 2024. This adjustment could help buffer some of the revenue losses associated with lower oil prices.
Fitch also cautioned that a prolonged period of low oil prices could lead to a deterioration in Kuwait's fiscal and external positions, which might trigger a downgrade in the rating. Conversely, there is potential for an upgrade if Kuwait's institutions and political system can successfully address long-term fiscal challenges through a credible and effective deficit reduction plan that can withstand lower oil prices.
MENAFN15092024000045015839ID1108675358
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.