\n\tRIYADH: Kuwait\u00a0retained\u00a0its\u00a0AA-\u00a0sovereign credit rating with a\u00a0Stable Outlook\u00a0from Fitch Ratings, which cited exceptionally strong fiscal and external balance sheets despite rising regional geopolitical risks.\u00a0<\/p>\n
\n\tThe rating agency said Kuwait\u2019s vast sovereign wealth assets and external buffers\u00a0remain\u00a0among the strongest of any Fitch-rated sovereign, although heavy dependence on oil, a costly welfare system, a large public sector, and\u00a0relatively weaker\u00a0governance continue to constrain the rating.\u00a0<\/p>\n
\n\tThe collapse of a ceasefire between the US and Iran in mid-July has kept the conflict a live risk to Kuwait\u2019s creditworthiness, with attacks damaging strategic infrastructure and disrupting transit conditions.\u00a0<\/p>\n
\n\tThe assessment comes as the International Monetary Fund projects Kuwait\u2019s fiscal deficit will widen to\u00a08.7 percent of gross domestic product in fiscal year 2025\/26\u00a0and\u00a09.4 percent in fiscal year 2026\/27, reflecting higher government spending and lower oil revenues. The fund expects\u00a0real GDP growth of 3.8 percent in 2026, driven by the unwinding of OPEC+ production cuts and resilient non-oil activity, while the current account surplus is forecast to moderate to\u00a019.6 percent of GDP.\u00a0<\/p>\n
\n\tIn its latest assessment, the agency said: \u201cKuwait\u2019s \u2018AA-\u2019 rating is supported by its exceptionally strong fiscal and external balance sheets, with sovereign net foreign assets relative to GDP the highest among all Fitch-rated sovereigns.\u201d \u00a0\u00a0<\/p>\n
\n\tOil export risks\u00a0remain\u00a0central\u00a0<\/p>\n
\n\tFitch said the conflict continues to weigh on Kuwait\u2019s ability to export crude, given its reliance on the Strait of Hormuz. Oil production fell\u00a070 percent,\u00a0to\u00a00.78 million barrels per day, between March and May before recovering to\u00a01.65 million bpd\u00a0in June and\u00a0around 2 million bpd\u00a0in July.\u00a0<\/p>\n
\n\tThe agency expects Kuwait\u2019s crude production to average around\u00a02 million bpd\u00a0for the fiscal year ending March 2027, with a fuller recovery the following year. It also forecast Kuwait\u2019s average oil price at\u00a0$81.4 per barrel\u00a0for fiscal year 2026, up\u00a021 percent\u00a0from fiscal year 2025, even as the fiscal break-even price\u00a0remains\u00a0above\u00a0$100 per barrel.\u00a0<\/p>\n
\n\tDeficit set to widen\u00a0<\/p>\n
\n\tUnder the government\u2019s own reporting convention, which excludes Fitch\u2019s estimate of Kuwait Investment Authority investment income, the agency said: \u201cWe expect the deficit to widen by\u00a04 percentage points\u00a0to about\u00a019 percent of GDP\u00a0in FY26 as the war weighs on revenue and the government maintains its infrastructure drive, although capex execution will be weaker than budgeted amid heightened security risks.\u201d\u00a0<\/p>\n
\n\tSalaries and subsidies accounted for 81 percent of Kuwait\u2019s spending and 40 percent of GDP in FY2025, while Fitch expects progress on subsidy reform to remain limited despite the budget assuming a reduction in subsidies. However, after including estimated investment income from the Kuwait Investment Authority, Fitch projects that Kuwait will record an overall fiscal surplus of 1.7 percent of GDP in FY2026, up from 0.3 percent in FY2025.\u00a0<\/p>\n
\n\tExternal assets still dwarf peers\u00a0<\/p>\n
\n\tFitch forecasts Kuwait\u2019s sovereign net foreign assets will rise to\u00a0668 percent of GDP\u00a0in 2026, from an estimated\u00a0652 percent\u00a0in 2025, more than\u00a010 times the median for AA-rated sovereigns. Most of these assets\u00a0are held in\u00a0the Future Generations Fund managed by the\u00a0Kuwait Investment Authority.\u00a0<\/p>\n
\n\tGovernment debt, meanwhile, is expected to climb from\u00a02.9 percent of GDP in fiscal year 2024\u00a0to\u00a038 percent by the end of fiscal year 2028, though this would\u00a0still remain\u00a0below the projected\u00a02028 AA median of 51.5 percent.\u00a0<\/p>\n
\n\tOutlook\u00a0<\/p>\n
\n\tFitch said a further escalation of the Iran conflict or a prolonged disruption to Kuwait\u2019s oil exports could pressure the rating downward, while credible evidence that Kuwait\u2019s institutions can tackle long-term fiscal challenges, alongside reduced geopolitical risk, could support an upgrade.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"RIYADH: Kuwait\u00a0retained\u00a0its\u00a0AA-\u00a0sovereign credit rating with a\u00a0Stable Outlook\u00a0from Fitch Ratings, which cited exceptionally strong fiscal and external balance sheets…\n","protected":false},"author":2,"featured_media":849111,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-849110","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/849110","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=849110"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/849110\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/849111"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=849110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=849110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=849110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}