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Rater maintains stable Kuwait outlook

KUWAIT CITY, Jan 14, (Agencies): Kuwait got sovereign foreign currency ratings of AA/Stable/A-1+ in the Middle East and North Africa Sovereign Rating Trends 2018 published by S&P Global Ratings recently.

The sovereign ratings are determined using six key factors in which countries are scored from 1 to 6 with ‘1’ as strongest and ‘6’ as weakest. Kuwait got a score of 1 in institutional assessment, 3 in economic assessment, 1 in external assessment, 1 in fiscal assessment/ budget performance, 1 in fiscal assessment/debt, and 3 in monetary assessment.

According to the report, the stable outlook for Kuwait is based on the expectation that its public and external balances will remain strong throughout the forecast period. This should be supported by a significant stock of financial assets. It is expected that these strengths will compensate for risks related to low oil price, non-diversification of national income sources, nascent parliamentary system and geopolitical tensions in the region.

The report explained the ratings could decline under any of the following circumstances:

■ Policy response to low oil prices failed to lift growth over the forecast horizon amid weaker fiscal and external finances

■ Deterioration of domestic political stability

■ Significant escalation of geopolitical risks Also, the ratings could increase if political reforms enhanced institutional effectiveness and improved long-term economic diversification, or if prospects for the oil sector improved significantly over the forecast horizon, the report added.

With regard to the indicators for the economic outlook in percentage, Kuwait’s real gross domestic product (GDP) growth in 2017 was 0.8 and 3.5 in 2018, the general government (GG) balance/GDP in 2017 was 7.6 and 11.9 in 2018, net GG debt/GDP in 2017 was 394.0 and 374.5 in 2018, current account balance/GDP in 2017 was 2.3 and 1.0 in 2018, and the narrow net external debt/current account receipts (CAR) was 656.3 in 2017 and 598.8 in 2018.

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