S&P revises #Kuwait's outlook to negative on depletion in liquidity buffer | ZAWYA MENA Edition

S&P revises Kuwait's outlook to negative on depletion in liquidity buffer | ZAWYA MENA Edition:

S&P Global Ratings on Friday revised Kuwait's outlook to 'negative' from 'stable', saying it expects that the country's main liquidity buffer, the General Reserve Fund, will be insufficient to cover central government deficit.

"The GRF balance has been steadily reducing over the past three years, but this process has accelerated in recent months following the decline in oil prices and Kuwait's implementation of the OPEC+ oil production cut agreement," the ratings agency said in a statement.

Kuwait has been drawing down its GRF to plug the deficit, which the International Monetary Fund estimates could reach more than 11% of gross domestic product this year, compared with a 4.8% surplus last year.

The ratings agency expects Kuwait's central government deficit to be almost 40% of GDP in fiscal 2020, up from an estimated 10% a year ago, estimating that the GRF alone will be unable to fund a deficit of that magnitude.