Moody's credit rating agency revealed in a recent report issued by it, that the vision is still unclear in Kuwait regarding government financing arrangements, which is the reason for reducing the sovereign rating to (A-), which makes it difficult to anticipate the potential impact.
The agency expects the General Investment Authority to authorize the General Reserve Fund to sell additional shares of its dwindling group of illiquid assets to the Future Generations Fund. The agency referred to the Future Generations Reserve Fund, which is another savings tool that possesses the majority of government savings, but is not available to finance the general budget, revealing that it is in light of the depletion of most of the General Reserve Fund's assets.
Moody's estimates the value of these assets at $15 billion as a maximum to cover budget expenditures, which will cover about less than half of the projected financing requirements for the next fiscal year. As such, it expects the government to take additional measures to avoid the financing crisis, which could include passing the long-awaited debt law or amending the existing legal framework to allow a portion of investment income from the Future Generations Fund to be transferred to the General Reserve Fund.
The agency estimates that the liquid portion of the assets in the General Reserve Fund, the smaller stabilization fund, has been largely depleted, but some additional liquidity could be provided by selling the remaining share of illiquid assets that we estimate at 12 percent of GDP as in February 2021 for the Future Generations Fund.
Source (Al-Arabiya.net website, Edited)
