KUWAIT CITY: Kuwait’s net sovereign foreign assets exceed 600 percent of gross domestic product (GDP), the highest ratio among Gulf countries by a significant margin, strengthening the country’s external financial position and its capacity to withstand economic shocks, according to Fitch Ratings.
In its latest assessment of Gulf sovereign finances, Fitch said the strong balance sheets of the region’s highest-rated countries continued to support their credit ratings despite mounting pressure on public finances from the regional conflict and disruptions to energy markets.
Kuwait is projected to maintain a fiscal surplus as a percentage of GDP in 2026, although Fitch has slightly revised its forecast downward from its December 2025 estimate. The country’s substantial sovereign assets provide financial flexibility to navigate fluctuations in global markets and energy prices.
Fitch warned that Gulf sovereign ratings could come under greater pressure if conflict-related disruptions to hydrocarbon exports prove more severe or prolonged than anticipated. Its baseline scenario, updated in September 2026, assumes a lasting agreement will reopen the Strait of Hormuz around the first quarter of 2027, with intermittent strikes and shipping disruptions continuing in the meantime.
The agency has retained its forecast for an average oil price of $87 per barrel in 2026, despite extending its assumed conflict timeline. It expects prices to decline in 2027 and 2028, while oil production in most Gulf Cooperation Council (GCC) countries is projected to fall in 2026 because of supply-route disruptions.
Fiscal pressures across the region also reflect differences in government spending policies, not just fluctuations in hydrocarbon revenues. Qatar has reduced public expenditure to offset revenue losses, Oman has moderately increased spending, Saudi Arabia brought forward some expenditure to the first quarter of 2026, and the United Arab Emirates has introduced countercyclical fiscal stimulus.
Investment income, particularly returns generated by sovereign wealth funds, provides an additional source of financial support for Gulf governments. Fitch also noted that government-related entities, especially those operating in the oil and gas sector, had maintained strong financial positions before the conflict began.
The agency cautioned, however, that contingent liabilities could become more significant if a prolonged or severe conflict damages non-oil economic activity and increases the need for government support. Such obligations depend on uncertain future events and do not automatically become direct government liabilities.
Kuwait’s strong sovereign financial position and the reported strength of its government-owned companies, particularly in the oil and gas sector, reduce the risk that such entities will place additional pressure on the state budget. Fitch’s assessment underscores the importance of Kuwait’s substantial external assets and fiscal buffers in supporting sovereign creditworthiness amid regional uncertainty, volatile energy markets and potential disruptions to oil and gas exports.
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