Kuwait was downgraded by S&P Global Ratings for the second time in less than two years after a fall in oil revenue and increased spending pressured the Persian Gulf nation\u2019s fiscal outlook.<\/p>\n
The sovereign credit rating was cut one level to A+ from AA-, the fifth-highest investment-grade level, according to a statement Friday. S&P now rates Kuwait two notches lower than Fitch Ratings and on par with Moody\u2019s Investors Service, which lowered its own assessment of the country last year for the\u00a0first time\u00a0. S&P\u2019s outlook for Kuwait is negative.<\/p>\n
\u201cThe downgrade reflects the persistent lack of a comprehensive funding strategy despite the central government\u2019s ongoing sizable deficits,\u201d according to S&P analysts. \u201cWe consider that these persistent delays could ultimately leave Kuwait more vulnerable to potential future terms-of-trade shocks.\u201d<\/p>\n
The\u00a0rating agency\u00a0downgraded\u00a0the sovereign in March 2020, citing materially lower oil prices. Although crude rebounded this year to more than $70 per barrel, a delay to proposed laws that would allow the government to borrow or withdraw from its $700 billion Future Generations Fund has left the treasury cash-strapped amid increased spending during the pandemic and delayed reforms.<\/p>\n
Kuwait\u2019s economy will grow by only 0.5% in real terms in 2021, following a 8.9% contraction last year on oil production cuts and pandemic effects, according to S&P. It expects Kuwait\u2019s central government deficits will average 17% of GDP over 2021-2024.<\/p>\n
Kuwait\u2019s government has been unable to borrow since its debut Eurobond in 2017, forcing it to rely on its General Reserve Fund instead. Liquid assets there are close to being depleted, forcing the Finance Ministry to push through other measures to meet spending needs.<\/p>\n
Source- Bloomberg<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Kuwait was downgraded by S&P Global Ratings for the second time in less than two years after a fall in oil revenue and increased spending pressured the Persian Gulf nation\u2019s fiscal outlook. The sovereign credit rating was cut one level to A+ from AA-, the fifth-highest investment-grade level, according to a statement Friday. S&P now […]<\/p>\n","protected":false},"author":1,"featured_media":73536,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,18],"tags":[],"class_list":["post-77395","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-local"],"yoast_head":"\n