Fitch Ratings has affirmed Kuwait's Long-term foreign and local currency Issuer Default Ratings (IDR) at 'AA'. The Outlooks on both ratings are Stable. Fitch has simultaneously affirmed Kuwait's Country Ceiling at 'AA+' and Short-term foreign currency rating at 'F1+'.
Kuwait's 'AA' ratings are primarily supported by its strong sovereign net foreign assets (SNFA), estimated by Fitch at USD323bn in 2011 (equivalent to 191% of GDP). These result from double-digit budget surpluses registered every year since 1999 thanks to receipts from the country's large oil reserves (6.1% of total world oil reserves). However, exposure to the oil sector (half of GDP, 83% of government revenue and 78% of CXR) is a vulnerability, given oil price volatility and regional geopolitical threats. Difficulties in reaching agreement at the political level have frustrated efforts to diversify away from oil.
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