S&P affirms Kuwait’s Sovereign Credit rating at AA- amid regional turmoil

2026-03-19 - 08:53

The Central Bank of Kuwait announced that global credit rating agency Standard & Poor’s has reaffirmed the State of Kuwait’s sovereign credit rating at AA- for the long term and A-1+ for the short term, maintaining a stable outlook. In a statement to the Kuwait News Agency (KUNA) on Wednesday, the Central Bank highlighted that Kuwait’s substantial financial assets serve as effective buffers against the repercussions of the ongoing regional conflict, reducing threats to critical infrastructure, including the nation’s vital oil facilities. The agency noted that the stable outlook reflects confidence in Kuwait’s robust fiscal and external reserves, which provide ample space to absorb geopolitical shocks, including temporary disruptions to oil production and exports. Regarding economic growth, Standard & Poor’s observed that oil production has been cut by more than half since the onset of the conflict, and force majeure has been declared for customers affected by the closure of key maritime routes. As a result, real GDP growth is projected to slow to just under 1 percent in 2026, compared to roughly 2 percent in 2025. On the fiscal front, the agency projected the budget deficit to rise to about 17 percent of GDP in fiscal year 2026, up from an estimated 8 percent in 2025, citing disruptions in oil production and persistently high expenditure levels. S&P also emphasized that no emergency liabilities are expected from the banking sector. The total loan portfolio of Kuwaiti banks is projected to grow by 8.5 percent in 2025, supported by recent reforms and an expansion in banking activity. Non-performing loans at the eight largest banks remain low at approximately 1.5 percent by the end of 2025, reflecting strong asset quality. Furthermore, local banks retain a solid position in net foreign assets, ensuring resilience against potential capital outflows in the event of escalating regional tensions, reinforcing the overall stability of Kuwait’s financial system.