S&P Global Ratings confirmed Kuwait’s long- and short-term foreign and local currency sovereign credit ratings at 'AA-/A-1+' on May 22, 2026, while maintaining a stable outlook. The rating agency emphasized that Kuwait’s unusually large pool of accumulated liquid assets should provide a significant buffer against the economic consequences of the ongoing Middle East war and related supply disruptions in the Strait of Hormuz.
S&P estimates that Kuwait’s liquid assets will exceed 550% of gross domestic product in 2026, a ratio the agency describes as one of the strongest among rated sovereigns. The Kuwait Investment Authority - which manages two principal funds and concentrates most of its holdings in the Future Generations Fund - is expected by S&P to see the U.S. dollar value of its assets continue to rise over the 2026-2029 period, even as the country runs forecast fiscal deficits during those years.
Despite the cushion provided by sovereign assets, S&P projects that Kuwait’s fiscal position will weaken in the near term. The agency anticipates the fiscal deficit widening to about 15% of GDP in fiscal 2027, up from roughly 10% in fiscal 2026. That deterioration comes even as S&P notes higher oil prices will partially offset the economic impact of sharply reduced oil production.
Kuwait Petroleum Corp. reduced production to 500,000 barrels per day from mid-March, a significant decline from a pre-war output level of 2.582 million barrels per day as of Feb. 28, 2026. S&P forecasts that full-year oil production will remain 25%-30% below pre-war levels, a shortfall the agency expects will contribute to a contraction in real GDP of around 2% in 2026.
In its baseline scenario, S&P assumes that supply disruptions in the Strait of Hormuz will ease during the second half of 2026. Reflecting market and supply assumptions, the agency revised its Brent crude price path to an average of $100 per barrel for the remainder of 2026, followed by $75 per barrel in 2027 and $65 per barrel through 2028-2029.
On the government balance sheet, S&P projects an increase in gross general government debt to about 42% of GDP by the end of fiscal 2030, rising from about 19% as of March 31, 2026.
The rating agency set out conditions under which the ratings could be pressured or uplifted. A potential downgrade could follow if Kuwait’s fiscal metrics or growth prospects were weakened by slower-than-expected progress on reforms aimed at taxation, expenditure control, and economic diversification. The ratings could also face stress if the war produced a protracted interruption to oil export earnings.
Conversely, S&P said it could consider raising the ratings within the next two years if Kuwait is able to sustain strong public finances while implementing reforms that foster deeper domestic capital markets and support economic diversification and growth.
Conclusion - S&P’s affirmation reflects the agency’s view that Kuwait’s exceptional liquidity position and the Kuwait Investment Authority’s asset base materially reduce near-term sovereign risk, even as fiscal deficits, lower oil production and elevated debt ratios present medium-term challenges.