KUWAIT WILL RETURN TO HUGE SURPLUSES IN THE NEXT TWO YEARS

  • 26/06/2022

Kuwait City: Kuwait's credit position depends on its exceptionally large financial reserves, where the assets of the sovereign wealth fund greatly exceed GDP, in addition to very low government debts and huge reserves of hydrocarbons with low production costs and very high levels of income. .


Based on its current assumptions of oil prices, Kuwait is likely to achieve huge financial surpluses during the next two years, which in its estimation will lead to rebuilding some liquid assets and raising the assets of the sovereign wealth fund, thus excluding liquidity risks at least in the next few years.

It also forecasts that the government's balance sheet and fiscal buffers will remain strong for the foreseeable future, as they will help maintain macroeconomic and external stability.

The aforementioned strengths balance with or offset Kuwait's very high dependence on oil, which creates fluctuations in the gross domestic product and public finances, in addition to the loose relationship between the government and parliament, which weakens policy formations and strengthens the state's ability to adapt to shocks, as well as on regional geopolitical tensions. 

Kuwait's dependence on oil leaves its economy and government financial resources highly vulnerable to the risks of switching from hydrocarbons to clean energy in the long term, which is reflected in the result of the country's environmental risk profile.

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