Moody’s credit rating agency said hat Kuwait’s high rating is supported by its strong economy classified at the level of (A1), exceptionally high levels of wealth and large reserves of hydrocarbons, but Kuwait has been slower than its counterparts in the region in developing the non-oil and private business sectors, and this had a heavy impact on the oil industry which led to fluctuations in the country’s economic performance.
In a report prepared by Investors Services Department, the agency said the levels of governance in Kuwait are weaker than its counterparts but the management of the country’s monetary policy is still a source of great institutional strength, stressing that Kuwait’s oil wealth supports a high level of per capita income, as it has the seventh largest oil reserves in the world.
“According to the current rate of production, its oil reserves may last for 90 years,” said the agency explaining Kuwait was able to invest in foreign assets of high quality because of great financial resources.
Regarding those investments owned by Kuwait, Moody’s said that the assets of the sovereign fund, managed by the Kuwait Investment Authority, far exceeds the country’s gross domestic product and government debt, which is a source of economic strength for Kuwait.
The Al-Anba daily quoting sources indicated despite the divergence of views on some economic issues between the legislative and executive authorities, Kuwait enjoys a strong monetary policy management, and prudent regulation of the banking system by the Central Bank of Kuwait. Moody’s added that there is an urgent need to start implementing the economic aspirations and objectives adopted by the Kuwaiti government, especially with regard to financial and economic reforms and improving governance in various government institutions.
On the other hand, the agency said the continued delay in implementing reforms due to political pressures in particular, which includes the imposition of value-added tax and the new selective tax and the reconsideration of public sector salaries, it harms the effectiveness of fiscal policy in Kuwait, as it expects the fiscal deficit to remain wide even with oil price recovery.
She pointed to the widening impact of the tense relationship between the executive and legislative authorities to include financing issues in recent years, and the resulting continuation of the impasse over the new public debt law and the withdrawal from the assets of the Future Generations Fund, to meet liquidity challenges.