Fitch keeps Kuwait’s sovereign rating at AA-, stable outlook
The country’s net sovereign foreign assets are projected to rise to about 608% of GDP in 2025, up from 576% in 2024, and it continues to rank as the strongest in external balances among all countries assessed by the agency.
• Kuwait has achieved an adequate score on ESG criteria, receiving a rating of ‘5’ for political stability, rights, rule of law, institutional and regulatory quality, and anti-corruption.
• On public debt, the resumption of borrowing, combined with wider deficits and lower oil prices, is expected to push the debt-to-GDP ratio from 2.9% in 2024/25 to around 12% by 2027.
Fitch Ratings has affirmed Kuwait’s sovereign credit rating at “AA-” with a stable outlook, the Central Bank of Kuwait said in a press release highlighting the agency’s latest assessment, reported Al Anba newspaper.
The rating reflects Kuwait’s exceptionally strong domestic financial position and solid external balance. However, it remains constrained by structural challenges, including heavy dependence on the oil sector and the large size of the public sector, which could pose long-term financial pressures.
The agency noted that while the passage of a law permitting the issuance of public debt has improved the flexibility of public finance frameworks, future expectations remain dependent on implementing tangible reforms to reduce reliance on oil revenues.
On external balances, Kuwait continues to rank as the strongest among all countries assessed by the agency. Net sovereign foreign assets are projected to rise to about 608% of GDP in 2025, up from 576% in 2024.
Regarding fiscal reforms, the agency highlighted the government’s ongoing efforts, particularly the prioritization of spending rationalization. It also emphasized the approval of the Public Debt Liquidity Law, which enables the issuance of debt instruments for the first time since the expiration of the previous Public Debt Law in 2017.
The new law provides for liquidity of KD 30 billion (around $100 billion) over fifty years. This measure is expected to ease pressure on the General Reserve Fund, strengthen local capital markets, establish a benchmark yield curve, and support development projects.
Kuwait’s budget position to weaken due to higher public spending
The agency expects Kuwait’s budget position to weaken in fiscal year 2025/26 due to higher public spending, largely driven by capital projects, alongside a decline in oil revenues from lower global prices. However, the recent OPEC decision to lift production restrictions in Q2 2025 is expected to partially offset revenue losses.
The agency also projects that the government will resume borrowing during 2025/26, with about 70% of the deficit financed through debt issuance and the remainder covered by General Reserve Fund assets.
On public debt, the resumption of borrowing, combined with wider deficits and lower oil prices, is expected to push the debt-to-GDP ratio from 2.9% in 2024/25 to around 12% by 2027. Despite this increase, Kuwait’s debt levels are projected to remain far below the 52.4% average for countries with a similar rating.
GDP growth set to rebound to 1.7%
Regarding GDP and inflation, the agency expects real GDP growth to rebound to 1.7% in 2025 after two consecutive years of contraction caused by OPEC oil production cuts. Annual inflation is projected to remain below 3% during 2025–2027.
The agency noted that the impact of the Middle East conflict and shipping disruptions in the Red Sea on Kuwait remains limited. However, reliance on oil continues to weigh on the sovereign rating, and budget outcomes remain highly sensitive to fluctuations in oil prices and production levels.
On governance, the agency stated that Kuwait has achieved an adequate score on Environmental, Social, and Governance (ESG) criteria, receiving a rating of “5” for political stability, rights, rule of law, institutional and regulatory quality, and anti-corruption.
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