“Moody's”, the credit rating agency, expected Kuwait to record large financial surpluses ranging between 5-6 percent of GDP in the current fiscal year and 3-4 percent in the next fiscal year. This is due mainly to the significant increase in oil revenues, based on the agency’s assumptions of oil prices, at about $100 per barrel in 2022 and $95 in 2023.
The agency indicated that the stable future outlook for Kuwait's sovereign rating reflects the balanced risks to the rating, the effective implementation of measures to reduce the government's exposure to oil revenues and diversify the economy may increase the flexibility of Kuwait's credit file in the face of fluctuations in oil prices.
The agency noted that, on the contrary, the acceleration of the global momentum towards a carbon transition that reduces the demand for oil and lowers its prices, in the absence of reforms, including the passage of legislation to expand financing options for the government, it may reintroduce liquidity risks and affect the credit profile in the long term. “Moody's” believes that the rating upgrade is dependent on factors such as improving prospects for financial and economic diversification significantly away from oil. In addition, a more productive relationship between the executive and legislative branches would enhance greater effectiveness of policies and increase the government's ability to respond to shocks, which would reflect positively on raising the rating.
Source (Al-Rai Kuwaiti Newspaper, Edited)
