S&P Cuts Kuwait’s Rating to A+ from AA- Citing Lack of Funds to Finance Deficit

S&P Global Ratings (S&P) has cut Kuwait’s rating by one notch to A+ from AA- whilst keeping its Outlook on the country as Negative. According to S&P, Kuwait had a central government deficit of 33% of gross domestic product (GDP) by the end of fiscal year ended March 2021. S&P predicts this deficit to average 17% of GDP per year from 2021 to 2024.

Why it Matters?

In 2020, Kuwait was hit hard with lower oil prices and the impact of COVID-19. Added to this, opposition within the parliament has prevented the government from passing a law that authorizes the issuance of debt or access to accumulated assets immediately. S&P’s downgrade is driven by Kuwait’s lack of a comprehensive funding strategy despite the central go...