S&P Global Ratings maintained the credit ratings for Kuwait as its deep pockets will help it weather a three-year lull in oil prices and cope with its undiversified economy.
The ratings agency affirmed the country’s AA/A-1+ long- and short-term foreign and local currency sovereign credit ratings, with a stable outlook. “We anticipate Kuwait's large government and external net asset positions will continue to afford the authorities space to gradually consolidate government finances without weighing on growth,” S&P said.
Oil prices have been depressed since mid-2014, dropping from highs of US$115 a barrel to hovering around $50 a barrel. And Kuwait relies on its hydrocarbon sector with oil and gas accounting for about 60 per cent of its GDP and 95 per cent of export revenues, according to Opec.
The decline in oil prices has hampered a portion of Kuwait's income levels, measured by GDP per capita, similar to other Gulf countries.
The credit ratings indicates S&P’s position that the country will be able to withstand the oil price volatility with strong finances. “We expect these strengths to offset risks related to the current low oil price, Kuwait's undiversified oil economy, and what we assess as its relatively nascent parliamentary system, in addition to geopolitical tensions in the region,” the agency said.
The assets from past oil windfalls has cushioned Kuwaiti policymakers, giving breathing room to counter slowing growth by increased spending particularly on infrastructure projects. Kuwait’s assets managed by the sovereign wealth fund Kuwait Investment Authority is estimated to be five times of this year’s GDP, S&P said. This has helped the government in its plans to invest $115 billion in the oil sector over the next five years, which will boost its production next year.
While Kuwait will likely comply with the Opec production cap to 2.7 million barrels per day (bpd), S&P expects Kuwait to ramp up oil output to over 3 million bpd by 2020. And this could increase further if an ongoing oil production dispute in the shared neutral zone with Saudi Arabia is fully resolved.
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Read more:
Kuwait follows UAE with oil output cut pledge
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However, the country's credit ratings could fall should there be a further deterioration on geopolitical risks or if the government's policy response to low oil prices fails to lift growth over the forecast horizon.
S&P assumes the price of Brent crude, the international benchmark, will average $50 per barrel through the end of next year, creeping up to $55 per barrel in 2019.
The past Palme d'Or winners
2018 Shoplifters, Hirokazu Kore-eda
2017 The Square, Ruben Ostlund
2016 I, Daniel Blake, Ken Loach
2015 Dheepan, Jacques Audiard
2014 Winter Sleep (Kış Uykusu), Nuri Bilge Ceylan
2013 Blue is the Warmest Colour (La Vie d'Adèle: Chapitres 1 et 2), Abdellatif Kechiche, Adele Exarchopoulos and Lea Seydoux
2012 Amour, Michael Haneke
2011 The Tree of Life, Terrence Malick
2010 Uncle Boonmee Who Can Recall His Past Lives (Lung Bunmi Raluek Chat), Apichatpong Weerasethakul
2009 The White Ribbon (Eine deutsche Kindergeschichte), Michael Haneke
2008 The Class (Entre les murs), Laurent Cantet
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Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Always check the weather forecast before setting off
Make sure you have plenty of water
Set off early to avoid sudden weather changes in the afternoon
Wear appropriate clothing and footwear
Take your litter home with you
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
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The lowdown
Bohemian Rhapsody
Director: Bryan Singer
Starring: Rami Malek, Lucy Boynton, Gwilym Lee
Rating: 3/5
Bombshell
Director: Jay Roach
Stars: Nicole Kidman, Charlize Theron, Margot Robbie
Four out of five stars
Key developments in maritime dispute
2000: Israel withdraws from Lebanon after nearly 30 years without an officially demarcated border. The UN establishes the Blue Line to act as the frontier.
2007: Lebanon and Cyprus define their respective exclusive economic zones to facilitate oil and gas exploration. Israel uses this to define its EEZ with Cyprus
2011: Lebanon disputes Israeli-proposed line and submits documents to UN showing different EEZ. Cyprus offers to mediate without much progress.
2018: Lebanon signs first offshore oil and gas licencing deal with consortium of France’s Total, Italy’s Eni and Russia’s Novatek.
2018-2019: US seeks to mediate between Israel and Lebanon to prevent clashes over oil and gas resources.
