Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Fitch Affirms Kuwait Stable 'AA' Rating  Join our daily free Newsletter

MENAFN - Arab Times - 21/12/2013
No. of Ratings : 0
Add to Mixx!



(MENAFN - Arab Times) Fitch Ratings has affirmed Kuwait's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'AA,' and projected non-oil GDP growth at three percent in 2013. Fitch, in its rating published on its website, said outlooks on long-term IDRs were stable. The country ceiling, it added, was affirmed at 'AA' and the short-term foreign currency IDR at 'F1.' Kuwait's 'AA' ratings are primarily supported by exceptionally strong sovereign balance sheet resulting from oil-related budget and current account surpluses, averaging 29 and 37 percent of GDP respectively over the past decade. Kuwait's sovereign net foreign assets are estimated at 232 percent of GDP in 2013 and the government debt at 4.9 percent of GDP, much lower than the 'AA' median (38.6 percent).

The ratings are constrained by exposure to the oil sector (40 percent of GDP, 80 percent of government revenue and current account receipts), noted Fitch. It added that efforts to develop non-oil economy have been hampered by a lack of political consensus on reforms and constraints on implementation capacity. Fitch expected the budget and current account surpluses to gradually reduce to respectively 23 percent and 33 percent of GDP by the fiscal year to March 2016 from an estimated 34 percent and 44 percent in Fiscal Year 2013. These projections reflected an expected lower oil price (100 per barrel by 2015 from 105 in 2013) and continuing rapid public spending and import growth.

Growth

Despite rapid current spending growth (more than 24 percent on average over the last five years and equivalent to an estimated 36 percent of GDP in FY 2014), Kuwait's breakeven oil price - the price of oil that balances actual government spending - at 54 per barrel in 2013, is only about half the actual oil price.
Fitch Ratings expected domestic politics to be more stable in 2014 than in 2013 and 2012 following the election of a new Parliament in July 2013. Stability should also benefit from the formal approval by the constitutional court of the new electoral law in June 2013. "Given Kuwait's recent political history, there is still risk of political tensions, including a return to direct confrontation between the executive and the legislative powers," said Fitch.

The rating agency expected improved cooperation between Parliament and government to support progress in project implementation. Public plans to develop infrastructure in Kuwait, such as the 2010-14 development plan, have largely lagged behind other Gulf Cooperation Council countries so far. However, the recent start in construction of the Sabiya Causeway (a 2.6bn project first tendered in 2006) is an "encouraging signal." Fitch forecasts non-oil GDP to grow by three percent in 2013, after 2.2 percent in 2012, primarily driven by increased public spending. Rapid wage growth in the public sector, including a 25 percent increase in mid-2012, has supported consumption. Non-oil growth should increase to 3.5 percent by 2015 with continuing rapid growth in public sector wages and higher public investment supported by a more favorable political environment. Fitch forecasts oil production to increase gradually (over one percent in 2014 to more than 1.4 percent in 2015) after a 2.6 percent decline in 2013.

Fitch said structural weaknessnes were common among the GCC countries, including weak governance and development indicators relative to 'AA' peers, weaknesses in the economic policy framework (such as a lack of monetary autonomy and weak fiscal framework) and regional political risks. However, Fitch said its stable Outlook showed upside and downside risks to the rating were currently well balanced. At forecast oil prices, Kuwait will continue to accumulate assets, further enhancing its capacity to deal with economic shocks. Fitch said it assumed that a severe and sustained negative shock to oil price is unlikely. It expected Brent oil prices to decline relative to 2013 (105 per barrel) but remain above 100 by 2015, comfortably higher than Kuwait's breakeven price. Fitch expected world GDP growth to increase gradually to 3.2 percent by 2015, from 2.3 percent in 2013, which will support global demand for oil. Fitch assumes no major political crisis in the region, such as a confrontation between Iran and the international community.

 


Arab Times




  MENA News Headlines
 Sep 19 2014 - Gilas seeks to end Asiad gold droughtArab News
(MENAFN - Arab News) GILAS PILIPINAS leaves for Incheon in South Korea on Saturday to gun for the Philippines' first basketball gold medal in more than five decades in the Asian Games with the ...

 Sep 19 2014 - Aafia Siddiqui seeks to abandon her legal fight for freedomArab News
(MENAFN - Arab News) NEW YORK: A Pakistan-born neuroscientist has become a rallying cry for militant groups demanding her release from a US prison. But in a little-noticed move she is trying to ...

 Sep 19 2014 - Australia foils IS plot 'in largest ever anti-terror raids'Arab News
(MENAFN - Arab News) SYDNEY: Australia's largest ever counterterrorism raids on Thursday detained 15 people and foiled an alleged plot by Islamic State (IS) militants to conduct 'demonstration ...

 Sep 19 2014 - Iraq PM opposes foreign soldiersArab News
(MENAFN - Arab News) BAGHDAD: Iraq's prime minister strongly rejected the idea of the US or other nations sending ground forces to his country to help fight the Islamic State group saying Wednesday ...

 Sep 19 2014 - Armed Shiite rebels push into SanaaArab News
(MENAFN - Arab News) SANAA: Armed Shiite rebels pushed into Yemen's capital Sanaa after clashing with the army in the city's northwest outskirts on Thursday security sources and residents said in an ...

 Sep 19 2014 - US: Assad broke chemical arms agreementArab News
(MENAFN - Arab News) WASHINGTON: US Secretary of State John Kerry on Thursday accused Syrian President Bashar Assad of breaking the terms of a global pact on chemical weapons by unleashing chlorine ...

 Sep 19 2014 - Alpen Capital commences operationsArab News
(MENAFN - Arab News) Alpen Capital Saudi Arabia has been licensed by the Capital Markets Authority (CMA) to commence operations. The company has established its first office in Riyadh and hired a ...

 Sep 19 2014 - Renault claims to excel in aftersale servicesArab News
(MENAFN - Arab News) Renault described as the number one European brand in the Kingdom claims to deliver the best aftersale services maintenance and spare parts across Saudi Arabia.Renault says it ...

 Sep 19 2014 - Abuja: Emirates upgrades aircraftArab News
(MENAFN - Arab News) Only two months after launching its operations to Abuja Emirates a global connector of people and places announces it will upgrade the route's operating aircraft to a Boeing ...

 Sep 19 2014 - SABB Takaful backs school bag donation drive for low-income familiesArab News
(MENAFN - Arab News) SABB Takaful Company sponsored a charity campaign aiming to provide school bags to students from limited income families. The community service project was held on the first day ...

more...


 






Google

Click to Apply

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help