Capital Intelligence Ratings Affirms Kuwait's Long-Term Rating at '+A'
- The country’s strong external financial position provides the economy with high resilience to absorb shocks
- Current account surplus and high reserves underpin the state’s financial stability
- Withdrawals from the General Reserve Fund and issuance of debt instruments cover upcoming financing needs
- Success of private subscriptions reflects broad demand and global confidence
- Recovery in oil exports supports economic growth of 10.5% in 2027 and 2028
- Strong banking indicators and high capital adequacy support the resilience of the banking sector
- Easing geopolitical risks and revenue diversification pave the way for a future credit rating upgrade
Credit rating agency Capital Intelligence has affirmed Kuwait’s long-term foreign and local currency sovereign credit ratings at “+A”, and confirmed its short-term currency ratings at “A1”, while maintaining a stable outlook.
The agency stated that the rating reflects the strength of Kuwait’s external financial position, supported by the large portfolio of foreign assets managed by the Public Investment Authority (PIA), which has provided the state with significant capacity to absorb external shocks, including the repercussions of severe disruptions in oil production and exports since late February 2026.
Despite short-term pressures, the agency affirmed the continued strength of Kuwait’s external position, noting a current account surplus of 23% of GDP in 2025.
Official reserves stood at $38.8 billion in May 2026, down from $40.6 billion at the end of 2025, while reserve adequacy levels remained high, covering approximately 2.4 times short-term external debt and 29.6% of broad money (M2).
The agency projected that the government’s financing needs for fiscal year 2027, estimated at around 30.4% of GDP, would be met through withdrawals from the General Reserve Fund and debt issuances under the Financing and Liquidity Law, benefiting from the restoration of borrowing capacity since March 2025, alongside the large asset base managed by the PIA, which exceeds $1 trillion.
It noted that the government issued bonds in three tranches worth $6 billion in July 2026, enabling it to reduce borrowing costs. The agency highlighted that the state’s overall fiscal position remains strong, recording a surplus estimated at around 21.7% of GDP in fiscal year 2026, supported by returns on PIA investments.
The agency emphasized that the Kuwaiti economy remains heavily reliant on the oil sector, which accounted for 47.3% of real GDP in 2025. It pointed to limited progress in implementing reforms under the 2024–2029 Development Plan and Kuwait Vision 2035.
In the banking sector, the agency observed that key indicators remain robust, with a capital adequacy ratio of 18.5% in March 2026. Non-performing loans stabilized at 1.6%, with provisions covering 235.2%. However, it warned of persistent credit concentration risks, particularly in the real estate sector, which accounted for 20.2% of total credit facilities to residents, as well as high reliance on public sector deposits, which represented around 26% of total deposits.
The agency stated that the stable outlook reflects its expectation that the current rating will remain unchanged over the next twelve months, balancing the strength of financial and external buffers against the one hand, and elevated geopolitical risks and heavy dependence on the oil sector on the other.
It added that upgrading the rating remains contingent on the easing of geopolitical risks, tangible progress in diversifying the economy and boosting non-oil revenues, and enhancing transparency and corporate governance. Conversely, the rating could be downgraded if disruptions to oil exports persist or regional tensions escalate, leading to a sustained deterioration in the country’s financial and external indicators.
