KUWAIT

RISK RATING
Moderate
Default High Risk Score 3.00
Normal Average 1.82
Weighted Average 1.69
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Emir Nawaf al-Ahmad al-Sabah has ruled Kuwait since 2020 when he succeeded widely respected statesman Sabah al-Ahmad. Younger generations of the royal family will seek influential positions as they have been left out of the line of succession. Their power will be checked by the Kuwaiti national assembly, which is by and large the region’s most powerful parliamentary body given its veto right on legislation and the right to take away confidence from individual ministers. Economic diversification through infrastructure is the primary objective of the government, although fuel subsidy reform will face opposition from parliament. Since Sabah’s passing, the lack of a recognised mediator in the monarchy’s leadership might undermine Kuwait’s role to host a dialogue between regional rivals Iran, Qatar, and Saudi Arabia. External pressures to abandon Kuwait’s neutrality will likely be reinforced.

  • The new emir built his career in the security sector, serving as interior and defence minister, as well as the deputy chief of the national guard. Emir Nawaf has never taken outright positions on key political matters and has stayed outside the spotlight throughout his career. His approach is unlikely to change during his reign, thus foreseeing an overall continuity with the policies and positions of his predecessor. The profile of the new crown prince who is next in the line of succession, Meshaal al-Ahmad al-Jaber al-Sabah, reflects that of the emir in terms of both security background and low profile. Parliamentary support will be essential for the government to pass critical legislation on financial borrowing and subsidy reform.
  • The expatriate population faces a trimming down as the pandemic has resulted in low oil prices that have shaken Kuwait’s economy. The financial impact prompted demands that the government reduce the number of expatriates and provide more jobs for Kuwaiti nationals who only make up 30 percent of the population. Hundreds of thousands of Indians, Egyptians, Filipinos, Sri Lankans, and others face forced deportations, which will raise the risk of civil unrest. Around 1.45 million Indians reside in Kuwait, making up roughly 30 percent of the population. As a result of new legislation, as many as 800,000 could be forced to leave the country once the law is implemented.
  • Kuwait’s debt has soared to USD 46 billion, around 33 percent of the GDP, due to a combination of extraordinary expenditures to fight COVID-19 and falling oil revenues. These factors, as well as Kuwait’s inability to borrow money abroad, motivated rare credit rating downgrades. The Kuwaiti government cannot issue sovereign bonds on international markets without previous approval from the national assembly. A national development plan is being implemented to reduce the share of oil revenues in the economy from 90 percent to one-third. The plan includes large-scale infrastructural projects, like the Mubarak al-Kabir port and the USD 86 billion Silk City. Another key reform concerns the phasing out of fuel subsidies, which is likely to face parliamentary opposition. Kuwaitis fear that subsidy reforms and a structural transition would undermine their privileged position.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
1.8
Expropriation, Nationalisation, Confiscation & Deprivation
1.2
Contract Frustration & Breach
1.2
Taxation
2.5
Bribery & Corruption
2.0
Regulatory Burden
1.0
Strikes, Riots & Civil Commotion
1.8
Security
1.2
Sovereign Default
3.0
Economic Volatiliy
2.5

Risk Rating Scale (small)

Severe
High
Elevated
Moderate
Low

Risk Score BTN

SECURITY MONITOR

ACLED DASHBOARD

MEDIA MONITOR

View Media Monitor BTN

RELATED ARTICLES