Moody's has maintained its stable outlook for Kuwait's banking system, reflecting the rating agency's view that government-funded projects will drive economic growth, and subsequently business for banks. This will soften the impact of declining consumer spending, as subsidy cuts take hold. Moody’s report stated that a record amount of projects under execution will create corporate lending opportunities for banks. The agency expects 6-7% credit growth over the outlook horizon of 12 to 18 months. The risk of project hold-ups going forward has increased, however, with the election of a new parliament in late 2016 in which government opposition groups won a large representation. The agency expects higher NPL formation, albeit from low levels, and NPL ratio to rise to 3% in the next 12-18 months, from 2.5% for rated banks  in 2016. However, banks maintain strong buffers against potential losses, with solid capital adequacy and a growing cushion of general provisions.