KUWAIT: Global forecasts of a "stable" to "negative" change on Kuwait's sovereign debt rating requires "serious work" to complete financial reforms, Finance Minister Khalifa Hamadeh said on Wednesday, describing the country's financial state as "solid." Commenting on the Fitch Ratings credit agency report issued earlier, which gave Kuwait an AA long-term rating, the minister said, "thankfully, Kuwait's financial position is strong and solid because it is fully supported by the Future Generations' Reserve Fund, which is witnessing continuous growth thanks to the efforts of those in charge."

However, he conceded that "the structural imbalances suffered by the state's public finances, which relate to annual revenues and expenditures, have led to the near depletion of liquidity in the state treasury (General Reserve Fund)." Amongst the government's top priorities in the coming stage is to "enhance liquidity in the treasury, and we stress, as we previously emphasized, the need for the concerted efforts of all parties, working as one team to achieve the sustainability of public finances," he added.

Fitch Ratings' revision of its long-term outlook for Kuwait is the third by the credit rating agency during the current fiscal year. Its report highlighted "near-term liquidity risk associated with the imminent depletion of liquid assets in the General Reserve Fund (GRF)."

Rating agency Fitch had said Wednesday it downgraded the outlook on Kuwait's sovereign debt rating to "negative" from "stable", saying it saw near-term liquidity risks associated with the state treasury fund. Fitch affirmed Kuwait's long-term rating at "AA".

The rating agency said the outlook change reflects near-term liquidity risk associated with the imminent depletion of liquid assets in the General Reserve Fund (GRF) in the absence of parliamentary authorization for the government to borrow.

"Without passage of a law permitting new debt issuance, the GRF could run out of liquidity in the coming months without further measures to replenish it" Fitch said. "Depletion of GRF liquidity would sharply limit the government's ability to make good on its spending obligations and could result in significant economic disruption."