By Abba Gwale
Kuwait’s government has transferred the last of its performing assets to the country’s sovereign wealth fund in exchange for cash to plug a monthly budget deficit of $3.3 billion, a person familiar with the matter said, leaving one of the world’s richest nations with few options to pay its bills.
Fitch on Wednesday cut Kuwait’s outlook to negative from stable, citing “the imminent depletion of liquid assets” in the absence of parliamentary authorization for the government to borrow.” The rating was affirmed at AA.
The assets include stakes in Kuwait Finance House and telecoms company Zain, the person said, asking not to be named because the information is private. State-owned Kuwait Petroleum Corp. was also transferred from the government’s treasury to the $600 billion Future Generations Fund, meant to safeguard the Gulf Arab nation’s wealth for a time after oil. KPC has a nominal value of 2.5 billion dinars ($8.3 billion), the person said.
The Finance Ministry declined to give details about the swaps.
Though Kuwait has one of the highest per capita incomes on earth, years of lower oil prices have forced the government to burn through its cash reserves while a festering political standoff has prevented it from borrowing. Desperate to generate liquidity, the government began swapping its best assets with the FGF for cash last year, but with those now gone, it’s not clear how it’ll cover its eighth consecutive budget deficit, projected at 12 billion dinars for the fiscal year beginning April.
