Moody’s projects net sovereign issuance of up to 27.6 billion dinars ($90 billion) would be needed to meet the Kuwaiti government’s funding requirements between the current fiscal year and the fiscal year ending March 2024. The rating company revised the outlook to stable, completing the review for downgrade started in March.
Lacking a new public debt law, the government has been unable to borrow since a debut Eurobond in 2017, forcing it to rely on the General Reserve Fund instead.
Kuwait’s parliament this month approved the state budget for the current fiscal year, projecting a deficit of 14 billion dinars after making adjustments to account for lower oil prices and a cut in spending. Tapping the much larger Future Generations Fund, designed as a buffer for the time when Kuwait’s oil runs out, would require a legislative change.
“In the continued absence of legal authorisation to issue debt or draw on the sovereign wealth fund assets held in the Future Generations Fund, available liquid resources are nearing depletion, introducing liquidity risk despite Kuwait’s extraordinary fiscal strength,” Moody’s said.