08/06/2024
08/06/2024
KUWAIT CITY, June 8 : The Central Bank of Kuwait (CBK) said Friday that the international rating agency of Standard & Poor’s confirmed the sovereign rating of Kuwait at A+, with a stable future outlook due to a huge stock of government financial assets support estimated at about 418 percent of the gross domestic product in 2024. In a statement, the Central Bank noted that the Standard & Poor’s report indicated that Kuwait’s structural and financial reforms are still lagging behind its peers, and its economy is considered among the most dependent on the oil sector, among GCC countries, which It exposes its economy to fluctuations of the oil market. The statement added that Standard & Poor’s expected that the real gross domestic product would grow by 2.4 percent on average during the years 2025- 2027, compared to a contraction of 2.3 percent in 2024, assuming a slight easing in the restrictions of the OPEC+ agreement on oil production.
CBK also pointed out that the rating agency also expected to accelerate the implementation of large government investment projects and focus on partnerships between the public and private sectors and high-impact projects led by the (New Kuwait 2035) vision. Regarding the rating prospects, the statement noted that the stable future outlook reflects the agency’s assumption that the large financial and external balances in Kuwait will continue to be strong during the forecast period, supported by a huge stock of government financial assets estimated at about 418 percent of the gross domestic product in 2024, which is among the largest sovereign funds of countries.
CBK noted that the agency expected these assets to reach 447 percent of the gross domestic product during the years 2024-2027, pointing out that these huge government assets are expected to mitigate the economic risks associated with the heavy dependence on the oil sector and potential fluctuations in oil prices. It stated that the agency listed the most important factors that could lead to a downgrade of the country’s sovereign credit rating in the event of a significant increase in public financial imbalances driven by a decline in oil prices or the absence of financial reforms.
The rating could also be downgraded if the government remains without comprehensive financing arrangements for the deficits in the general budget, the report noted. CBK also said that the agency stated that the country’s credit rating could (KUNA)