S&P Global Ratings upgraded Kuwait’s credit rating by one notch from A+ to AA- while maintaining a stable outlook, citing progress in public finance reforms, according to a statement issued by the Central Bank of Kuwait. The upgrade reflects improved fiscal frameworks and structural advancements supporting long-term economic resilience. n nThe credit assessment highlighted the recently passed Financing and Liquidity Law in March 2025, which establishes comprehensive budget financing mechanisms over medium- to long-term horizons. S&P anticipates that the government will continue advancing a medium-term fiscal strategy aimed at broadening non-oil revenue streams and enhancing financial sustainability. n nFiscal and Economic Reforms n nS&P expects Kuwait to persist with a series of fiscal and economic reforms aligned with its Vision 2035 development plan. These initiatives are primarily focused on economic diversification, modernizing infrastructure, and expanding public revenue sources to strengthen fiscal durability. n nThe stable outlook reflects the agency’s view that Kuwait’s fiscal and external balances will remain very strong over the medium term, supported by substantial government financial assets. These reserves, combined with ongoing reform momentum, are expected to mitigate economic risks tied to heavy reliance on the oil sector, potential oil price volatility, and high levels of public expenditure. n nEconomic Growth n nThe agency noted that Kuwait’s economy expanded by 1.3% year-on-year in the first half of 2025. Public finance reforms, increased oil production, and large-scale capital projects are expected to drive economic momentum, with growth accelerating to an average of 2% annually between 2025 and 2028, following two consecutive years of contraction. n nRapid implementation of fiscal adjustments is anticipated to improve fiscal discipline over both medium- and long-term periods. These measures include boosting non-oil government revenues and tighter control over public spending. n nCapital Investments n nThe report emphasized that extensive capital investments will support economic expansion, including the development of the Northern Economic Zone and multiple energy projects. The hospitality sector is expected to benefit from the ongoing expansion of Kuwait International Airport, projected for completion in 2027. n nAdditionally, growth will be supported by visa reforms such as introducing visa-on-arrival for all Gulf Cooperation Council residents, implementing an electronic visa system, and eliminating minimum salary requirements for family visas. These changes aim to enhance mobility and attract greater regional travel and investment. n nPublic Budget Outlook n nRegarding fiscal developments, S&P noted that lower oil prices and high public spending levels will likely result in budget deficits over the medium term. However, current account surpluses and a strong net external asset position continue to serve as key credit strengths in the external balance framework. n nThe agency expects Kuwait’s dinar exchange rate to remain linked to an undisclosed weighted basket of currencies. Historically, this monetary framework has helped manage inflation effectively, and S&P forecasts annual inflation to remain moderate at around 2.4% from 2025 to 2028—lower than levels observed in many emerging and advanced economies. n nBanking Sector n nS&P does not anticipate significant contingent liabilities emerging from Kuwait’s banking sector. The agency projects loan portfolio growth among the largest eight banks to range between 8% and 10% during 2025–2026, supported by a modestly improving economic environment and low interest rates. n nThe report noted that credit losses and non-performing loans in the banking sector have reached their lowest levels in recent history. Ample loan loss provisions have strengthened banks’ capacity to manage distressed loans across economic cycles. n— news from إرم بزنس
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Why Did S&P Upgrade Kuwait’s Credit Rating to AA-?
S&P Global Ratings upgraded Kuwait’s credit rating by one notch from A+ to AA- while maintaining a stable outlook, citing progress in public finance reforms, according to a statement issued by the Central Bank of Kuwait. n nThe credit assessment highlighted the recently passed Financing and Liquidity Law in March 2025, which establishes comprehensive budget financing mechanisms over medium- to long-term horizons. S&P anticipates that the government will continue advancing a medium-term fiscal strategy aimed at broadening non-oil revenue streams and enhancing financial sustainability. n nFiscal and Economic Reforms n nS&P expects Kuwait to persist with a series of fiscal and economic reforms aligned with its Vision 2035 development plan. These initiatives are primarily focused on economic diversification, modernizing infrastructure, and expanding public revenue sources to strengthen fiscal durability. n nThe stable outlook reflects the agency’s view that Kuwait’s fiscal and external balances will remain very strong over the medium term, supported by substantial government financial assets. These reserves, combined with ongoing reform momentum, are expected to mitigate economic risks tied to heavy reliance on the oil sector, potential oil price volatility, and high levels of public expenditure. n nEconomic Growth n nThe agency noted that Kuwait’s economy expanded by 1.3% year-on-year in the first half of 2025. Public finance reforms, increased oil production, and large-scale capital projects are expected to drive economic momentum, with growth accelerating to an average of 2% annually between 2025 and 2028, following two consecutive years of contraction. n nRapid implementation of fiscal adjustments is anticipated to improve fiscal discipline over both medium- and long-term periods. These measures include boosting non-oil government revenues and tighter control over public spending. n nCapital Investments n nThe report emphasized that extensive capital investments will support economic expansion, including the development of the Northern Economic Zone and multiple energy projects. The hospitality sector is expected to benefit from the ongoing expansion of Kuwait International Airport, projected for completion in 2027. n nAdditionally, growth will be supported by visa reforms such as introducing visa-on-arrival for all Gulf Cooperation Council residents, implementing an electronic visa system, and eliminating minimum salary requirements for family visas. These changes aim to enhance mobility and attract greater regional travel and investment. n nPublic Budget Outlook n nRegarding fiscal developments, S&P noted that lower oil prices and high public spending levels will likely result in budget deficits over the medium term. However, current account surpluses and a strong net external asset position continue to serve as key credit strengths in the external balance framework. n nThe agency expects Kuwait’s dinar exchange rate to remain linked to an undisclosed weighted basket of currencies. Historically, this monetary framework has helped manage inflation effectively, and S&P forecasts annual inflation to remain moderate at around 2.4% from 2025 to 2028—lower than levels observed in many emerging and advanced economies. n nBanking Sector n nS&P does not anticipate significant contingent liabilities emerging from Kuwait’s banking sector. The agency projects loan portfolio growth among the largest eight banks to range between 8% and 10% during 2025–2026, supported by a modestly improving economic environment and low interest rates. n nThe report noted that credit losses and non-performing loans in the banking sector have reached their lowest levels in recent history. Ample loan loss provisions have strengthened banks’ capacity to manage distressed loans across economic cycles.