Fitch Affirms Kuwait at 'AA'; Outlook Stable
Credit rating agency Fitch has affirmed Kuwait's long-term foreign-currency Issuer Default Rating (IDR) at 'AA' with a stable outlook.
"Kuwait's key credit strengths are its exceptionally strong fiscal and external balance sheets. These are increasingly offset by Kuwait's institutional paralysis and slow pace in addressing growing public finance challenges stemming from heavy oil dependence," it said in its report.
Fitch estimated the foreign assets of the Kuwait Investment Authority (KIA) at around $529 billion at the end of the fiscal year ending March 2020 (FY19/20), accounting for the bulk of Kuwait's sovereign net foreign asset position of 472% of GDP which is the highest of any Fitch-rated sovereign.
"The Reserve Fund for Future Generations (RFFG) accounted for around USD489 billion and has grown over an extended period, due to investment returns and the statutory annual transfer of 10% of government revenue," it noted.
Also, Fitch said that in 2020, overall real GDP growth is likely to be positive amid an expansion of oil production and the commissioning of refinery upgrades, although disruptions related to the coronavirus will likely push the non-oil economy into recession for the year.
However, the banking sector could absorb a rise in problem loans, being adequately capitalised, liquid and profitable, it noted.