S&P Raises Kuwait Outlook to Stable

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By Stephen Nakrosis

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S&P Global Ratings on Friday said it was raising its outlook on Kuwait to stable from negative, adding it was affirming the country’s A+/A-1 long- and short-term foreign- and local-currency sovereign credit ratings.

S&P said Kuwait, as a major oil producer, will benefit from a favorable outlook for oil prices and production, “which we expect to persist until the end of 2023.” S&P said it was projecting an average oil price of just above $100 per barrel for 2022 and $85/bbl for 2023. The agency said it expects oil prices to average $55/bbl 2024.

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S&P said it expects Kuwait will run a cumulative general government surplus of 18% of GDP over this and next year, “given our estimate of the breakeven oil price of around $75-$80.” This will allow Kuwait’s government to replenish liquidity in the “previously depleted main treasury buffer, the General Reserve Fund,” S&P said.

In July 2021, S&P downgraded Kuwait to A+, with a negative outlook. At the time, the agency said it forecast Kuwait’s central government deficits would average 17% from 2021 to 2024.

S&P also said at the time “the negative outlook primarily reflects risks relating to the government’s ability to overcome the institutional roadblocks preventing it from implementing a financing strategy for future deficits.”

Write to Stephen Nakrosis at [email protected]

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Credit: www.marketwatch.com /

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