DUBAI: Ratings agency S&P Global Ratings cut Kuwait’s rating by one notch citing the Gulf state’s lack of a funding strategy to finance its deficit.
Hit hard by lower oil prices and the COVID-19 pandemic last year, Kuwait faces liquidity risks largely because parliament has not authorized government borrowing due to a standoff.
S&P cut Kuwait’s rating by one notch to A+ from AA- and kept its outlook on the country negative, it said in a statement late on Friday.
“The downgrade reflects a persistent lack of a comprehensive funding strategy despite the central government’s ongoing sizeable deficits,” it said.
“Due to parliamentary opposition, the government has so far been unable to pass a law giving it the authority to issue debt or gain immediate access to its large stock of accumulated assets.”
S&P expects central government deficits to average 17 percent of gross domestic product annually between 2021 and 2024. In the fiscal year that ended in March, the country ran a central government deficit of 33 percent of GDP, S&P estimated.
Despite a sluggish pace of reforms, the agency said it still expected Kuwait to eventually adopt a debt law that would allow the government to borrow or overcome parliamentary opposition to gain access to funding alternatives.
S&P had already cut the rating of the OPEC member state last year due to lower oil prices.
Oil-rich Kuwait is the only Gulf monarchy to give substantial powers to an elected parliament, which can block laws and question ministers.
Frequent rows between the cabinet and assembly have led to successive government reshuffles and dissolutions of parliament over decades, hampering investment and reforms.
S&P cuts Kuwait rating on lack of deficit-financing strategy
https://arab.news/rmdek
S&P cuts Kuwait rating on lack of deficit-financing strategy
- Rating cut one notch to A+ from AA-; outlook remains negative
- S&P expects deficits to average 17 percent of GDP from 2021 to 2024
Closing Bell: Saudi Arabia’s main index closes in red at 10,364
RIYADH: Saudi Arabia’s Tadawul All Share Index closed lower on Sunday, shedding 185.05 points, or 1.75 percent, to end the session at 10,364.03.
Total trading turnover on the benchmark index stood at SR2.55 billion ($680 million), with 20 stocks advancing and 237 declining.
The Kingdom’s parallel market Nomu also retreated, falling 0.63 percent, or 147.19 points, to close at 23,371.82.
The MSCI Tadawul Index slipped 1.71 percent to 1,369.56.
Saudi Industrial Export Co. was the top gainer on the main market, with its share price jumping 9.87 percent to SR2.56.
Shares of Naqi Water Co. rose 2.53 percent to SR58.80, while Shatirah House Restaurant Co. advanced 2.18 percent to SR9.39.
On the downside, Gulf Union Alahlia Cooperative Insurance Co. posted the steepest decline, with its share price falling 4.61 percent to SR10.14.
On the announcements front, Scientific & Medical Equipment House Co. said it had been awarded a contract valued at SR260.98 million by the Ministry of Human Resources and Social Development to supply uncooked food materials and catering items to beneficiaries at the ministry’s residential branches across the Kingdom.
The project scope also includes providing cooked meals to selected anti-begging offices over a 24-month period, according to a Tadawul statement. The company added that the financial impact of the contract will begin in the fourth quarter of this year.
It said further developments would be disclosed in due course after all relevant parties sign the final contract and a copy is received.
Shares of Scientific & Medical Equipment House Co. edged up 0.31 percent to SR32.44.
Separately, Dr. Soliman Abdel Kader Fakeeh Hospital Co. and its subsidiaries signed an agreement with Oloof Development Co., a wholly owned subsidiary of Jazan Municipality, to lease a strategic land plot in Jazan City for SR217.99 million.
According to a Tadawul statement, the land, which spans 34,581 sq. meters, will be used to develop an integrated healthcare facility under a 50-year lease.
The company said the financial impact of the agreement is expected to begin once the medical facility is completed and becomes operational.
Shares of Dr. Soliman Abdel Kader Fakeeh Hospital Co. fell 1.92 percent to SR33.74.
