– Moody’s affirmed Kuwait’s “A1” credit rating with a stable outlook, citing strong balance sheet and fiscal buffers.

– The lack of reform progress could make Kuwait’s economy and government finances more vulnerable to oil market volatility and long-term carbon transition risks.

– The dissolution of parliament and temporary suspension of constitutional articles might accelerate reforms, but global carbon transition trends could weaken Kuwait’s credit profile without significant fiscal and economic reforms.

Ratings agency Moody’s has affirmed Kuwait’s credit rating at “A1” with a stable outlook, citing the country’s strong balance sheet and fiscal buffers.

The affirmation reflects Kuwait’s macroeconomic and external stability.

However, Moody’s notes that the lack of progress in reforms could reduce the economy’s and government finances’ vulnerability to oil market volatility and long-term carbon transition risks.

The rating agency highlighted that its current baseline assumptions do not account for significant progress in economic and fiscal diversification away from hydrocarbons, which could mitigate Kuwait’s exposure to oil price fluctuations and long-term carbon transition.

Moody‘s also mentioned that the recent dissolution of parliament and temporary suspension of related constitutional articles, intended to overcome institutional constraints, could potentially accelerate reforms.

Conversely, Moody’s warned that increasing global momentum towards carbon transition, which could significantly lower the demand for and price of oil, would likely negatively impact Kuwait’s credit metrics and weaken its credit profile in the absence of fiscal and economic reforms.