RIYADH: Kuwait retained its AA- sovereign credit rating with a Stable Outlook from Fitch Ratings, which cited exceptionally strong fiscal and external balance sheets despite rising regional geopolitical risks.
The rating agency said Kuwait’s vast sovereign wealth assets and external buffers remain among the strongest of any Fitch-rated sovereign, although heavy dependence on oil, a costly welfare system, a large public sector, and relatively weaker governance continue to constrain the rating.
The collapse of a ceasefire between the US and Iran in mid-July has kept the conflict a live risk to Kuwait’s creditworthiness, with attacks damaging strategic infrastructure and disrupting transit conditions.
The assessment comes as the International Monetary Fund projects Kuwait’s fiscal deficit will widen to 8.7 percent of gross domestic product in fiscal year 2025/26 and 9.4 percent in fiscal year 2026/27, reflecting higher government spending and lower oil revenues. The fund expects real GDP growth of 3.8 percent in 2026, driven by the unwinding of OPEC+ production cuts and resilient non-oil activity, while the current account surplus is forecast to moderate to 19.6 percent of GDP.
In its latest assessment, the agency said: “Kuwait’s ‘AA-’ rating is supported by its exceptionally strong fiscal and external balance sheets, with sovereign net foreign assets relative to GDP the highest among all Fitch-rated sovereigns.”
