The Kuwait panel has warned against downgrading the country’s sovereign rating

General view of the Kuwaiti capital (Archive)

Thursday 21 September 2023 / 19:19

The Supreme Committee for Sovereign Credit Rating Administration says all rating agencies expect Kuwait to adopt financing mechanisms other than withdrawal from the public reserve fund, according to the finance minister’s response to a parliamentary question.
The panel added in its response, “The agencies indicated the possibility of downgrading the sovereign debt rating of the State of Kuwait as the pace of implementing structural financial and economic reforms to diversify the state’s sources of income and rationalize public spending slows.”
In the first year of the plan, which will extend from 2023, the government said in a work plan submitted to parliament in July that it wants to approve a public debt law and its regulatory framework that links to projects of added economic value. 2027.

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But the law ran into initial opposition from representatives, as key members of Kuwait’s National Assembly sharply criticized the government’s proposal to approve a long-awaited public debt law, an early sign that the new government may face old, familiar challenges. May be a hindrance to economic reforms.

Perpetual bickering between successive governments and parliaments in Kuwait in recent years has hampered economic reforms, including blocking a public debt law that, if passed, would have allowed Kuwait to benefit from international credit markets and hedge against risks to the country’s public budget. Dependent heavily on oil.

The government panel pointed out the importance of linking credit rating agencies to laws authorizing laws to provide liquidity to state public exchequers, such as the Public Debt Act and the Financial and Economic Reforms Act.