Moody's, a credit rating agency, announced that Kuwait's financial strength at AAA is a score that it shares with Singapore and Hong Kong, and reflects the exceptional level of its sovereign wealth fund assets.
The agency noted that the country's high fiscal surpluses helped create huge assets that kept government debt at low levels, and provided protection against the large fiscal deficit, which is expected to average around 31.7% of GDP between the fiscal years 2020-2021 and 2021-2022.
She explained, "Despite our expectations that Kuwaiti government revenues will remain heavily dependent on oil revenues for the foreseeable future and with the ongoing fiscal deficit, Kuwait will maintain an unusually strong public budget and a large net of total assets."
At the same time, Moody's expected government revenues to decline by more than half in the current fiscal year, explaining that the government still expects an increase in spending on an annual basis by 1.7% to 21.5 billion dinars ($ 70.27 billion) for this year, noting that half a billion dinars ($ 1.634 billion) of this amount relates to private expenditures to counter the repercussions of the Corona virus.
It added that total spending on subsidies increased from 3.1 billion dinars ($ 10.1 billion) (9% of GDP) in the 2015-2016 fiscal year to 4.7 billion dinars ($ 15.3 billion) (11% of GDP) in the fiscal year. 2019-2020.
At the end of last September, Moody's downgraded Kuwait from Aa2 to A1. "Because there is a risk related to liquidity."
The reduction prompted the Kuwaiti government to form a specialized committee to improve the sovereign credit rating.
Kuwait's budget deficit reached 5.64 billion dinars ($ 18.5 billion) in the fiscal year 2019-2020 that ended last March, an increase of 69% over the previous fiscal year.
The budget deficit is expected to rise to 14 billion dinars (46 billion dollars) in the current fiscal year, according to Ministry of Finance data.
The deficit for the fiscal year ending on March 31 came as a result of a 16% decline in revenues.
The country's public debt is 3.3 billion dinars ($ 11 billion), and the government presented to Parliament a bill that would allow it to borrow $ 65 billion over 30 years, including $ 17 billion in 2020, but Parliament rejected the project.
The Kuwaiti government relies on oil revenues for about 90% of its revenues, and the decline in prices and demand has increased the deficit.
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