Fitch warns against misuse of borrowing proceeds

The weekly Al-Shal report stated that on September 17, 2026, Fitch Ratings issued its sovereign credit rating report for Kuwait, affirming Kuwait’s rating at “AA” with a stable outlook. The rationale mirrors the recurring justifications found in the reports of the three major credit rating agencies: external financial buffers, or the Future Generations Reserve, which represent savings accumulated from years of oil market booms in excess of revenues. Kuwait was the first country to establish a sovereign wealth fund in February 1953, which was safeguarded by Law No. 106 of 1976 concerning the Future Generations Reserve. This law prohibited any encroachment on the reserve and mandated that 10% of total public revenues be transferred to it annually. In numerical terms, Fitch valued the reserve at approximately 668% of the 2026 gross domestic product (GDP). 2026 is projected to see GDP decline by about 9.8% compared to 2025, when GDP stood at roughly $136.7 billion, or a loss of approximately $13.4 billion, according to estimates by the Economist Intelligence Unit (EIU). This implies that Kuwait’s expected GDP for the current year is around $123.3 billion. Similar to Moody’s, Fitch praises the availability of a new channel for government borrowing, reiterating the same criticism we raised in the Moody’s report: borrowing from the Future Generations Reserve is not counted toward the public debt balance.