Moody's Decreases Kuwait's Credit Rating

  • Kuwait, State of Kuwait
  • 23 September 2020
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Moody's reduced the sovereign credit rating of Kuwait from (AA2) to (A1) with a stable outlook, indicating that the decision to reduce Kuwait's credit rating reflects the increase in liquidity risks for the government and a weaker evaluation of Kuwait's institutions and the strength of governance.

According to the agency, liquidity risks have increased for the Kuwaiti government in the absence of a legal mandate to issue debt or access to the Future Generations Fund, indicating that the continued inability to respond to severe revenue shocks is caused by oil prices, which indicates a weaker effectiveness of fiscal policy.

Moreover, the monetary reserve of Kuwait recorded its highest historical level at the end of last August, after it rose to 13.55 billion dinars (44.39 billion dollars), an increase on a monthly basis by 3.8 percent and a value of 494 million dinars (about 1.62 billion dollars), to surpass its all-time high of last June, when it reached 13.11 billion dinars (42.9 billion dollars).

The increase in Kuwait's foreign monetary reserves accords with the remarkable recovery from the repercussions of the Coronavirus, the gradual return of economic life and the rise in oil prices, in addition to the return of foreign investment flows in the Kuwait Stock Exchange.

Source (Al-Arabiya.net, Edited)