Kuwait has been downgraded for the first time by Moody’s Investors Service, a decision the ratings agency said reflects the increase in the government’s "liquidity risks".

The sovereign credit rating was cut two levels to A1, the fifth-highest investment-grade level and on par with China and Saudi Arabia, according to a statement on Tuesday. Moody’s now ranks Kuwait two steps lower than Fitch Ratings and one below S&P Global Ratings, which lowered its own assessment of the country in March for the first time ever.

Moody’s projects net sovereign issuance of up to KD27.6 billion ($90 billion) would be needed to meet the Kuwaiti government’s funding requirements between the current fiscal year and the fiscal year ending March 2024. The rating company revised the outlook to stable, completing the review for downgrade started in March.

Lacking a new public debt law, the government has been unable to borrow since a debut Eurobond in 2017, forcing it to rely on the General Reserve Fund instead. Liquid assets there are close to being depleted, forcing the Finance Ministry to push through other measures to meet spending needs.

Kuwait’s parliament this month approved the state budget for the current fiscal year, projecting a deficit of 14 billion dinars after making adjustments to account for lower oil prices and a cut in spending. Tapping the much larger Future Generations Fund, designed as a buffer for the time when Kuwait’s oil runs out, would require a legislative change.

“In the continued absence of legal authorization to issue debt or draw on the sovereign wealth fund assets held in the Future Generations Fund, available liquid resources are nearing depletion, introducing liquidity risk despite Kuwait’s extraordinary fiscal strength,” Moody’s said.

The government has been looking for approval from parliament to borrow as much as KD20 billion. In response, the finance and economic committee has proposed reducing the limit in half, an idea the Finance Ministry said it will study but then turned down.

Measures passed by lawmakers so far, including the removal of the mandatory annual transfer of 10 percent of government revenue to the Future Generations Fund, “have only extended the point of depletion” to December 2020, Moody’s estimates.

A debt ceiling of KD20 billion dinars in Kuwait’s draft law would be reached in less than two years under Moody’s baseline scenario.

“The persisting deadlock addressing the funding situation now directly threatens the ability of the government to function, representing a significant escalation in the brinksmanship between the two branches of government,” Moody’s said.