Fitch Ratings has affirmed Kuwait's sovereign credit rating at "AA-" with a stable outlook, recognizing the country's exceptionally strong external balances and financial position. The Central Bank of Kuwait highlighted that the nation's net sovereign foreign assets are projected to increase to 608 percent of GDP in 2025, up from 576 percent in 2024, maintaining Kuwait's position as the strongest among all rated countries in external balances.
The rating agency noted that Kuwait's structural challenges, including heavy dependence on oil and a large public sector, continue to constrain the rating. The recent approval of the Public Debt Law, allowing for KD 30 billion in borrowing over fifty years, has improved fiscal flexibility but future prospects depend on implementing substantive reforms to reduce oil revenue dependence.
Fitch expects Kuwait's budget position to weaken in fiscal year 2025/2026 due to increased public spending and lower oil revenues, though recent OPEC production increases should partially offset these effects. The debt-to-GDP ratio is projected to rise from 2.9 percent in 2024/2025 to approximately 12 percent by 2027, though this remains well below the peer average of 52.4 percent.
The agency projects real GDP growth to rebound to 1.7 percent in 2025 following two years of contraction, with inflation remaining below 3 percent through 2027. Kuwait received adequate scores on ESG criteria, particularly in political stability, rule of law, and anti-corruption measures.
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