KUWAIT CITY, Feb 3, (KUNA): Standard & Poor’s (S&P) has affirmed its credit rating AA/A-1+ for the State of Kuwait with stable outlook.
The world ratings agency said in a press release that the stable outlook reflects its expectation that Kuwait’s public and external balance sheets will remain strong over the forecast horizon, backed by a significant stock of financial assets.
The agency expected these strengths to offset risks related to lower oil prices, Kuwait’s undiversified economy, and rising geopolitical tensions in the region.
Kuwait’s economic flexibility will be backed by governmental investment spending and gradually controlled public budget, it said, pointing to a reasonable rise in oil prices this year.
Falling oil prices have severely impacted the Gulf country’s economy since oil prices began their downward slide in 2014, according to the press release.
The ratings agency forecast Kuwait’s growth will average around 3 percent over 2019-2021 on the back of rising oil production and investment projects, affirming the country’s outlook as “stable”.
Moderately high oil prices expected this year, along with a broad public investment program, are expected to support growth momentum over the forecast period, the agency added.
The S&P anticipated Kuwait’s oil output to rise to over three million barrels per day (bpd) by 2021 from its current level of 2.7 million bpd.
Gradual fiscal consolidation meanwhile is expected through to 2020 with likely introduction of spending caps and value added tax in 2019, it indicated.
The Kuwaiti government is expected to post a deficit of 16 percent for the current fiscal year after the deduction of government revenues to the Future Generations Fund, it said.
The financial system in Kuwait is stable and Kuwaiti banks enjoy a strong capital base with cash adequacy according to Basel III, the rating agency pointed out.