Kuwait emir warns oil price drop will affect financial solvency

The decline in oil prices and the value of investment assets since the start of the coronavirus outbreak will adversely affect the “financial solvency” of Kuwait, Sheikh Sabah al-Ahmad al-Jaber Al-Sabah has said.

“Kuwait is facing the big and unprecedented challenge of shielding our economy from the external shocks caused by this virus, specifically the decline in oil prices and the value of investments and assets, which will have a negative impact on the financial solvency of the state,” the emir was cited by the state news agency KUNA as saying on Saturday.

It was not clear if the comment meant that Kuwait could delay the payment of government dues, or whether it was a general statement about the deterioration of the state’s finance as a result of the economic impact of the health crisis.

Moody’s Investors Service has placed Kuwait’s Aa2 long-term issuer rating on review for a downgrade, citing the significant decline in government revenue from the collapse in oil prices, and uncertainty that it will be able to access sufficient sources of financing at a time of increased need.