International rating agency Fitch IBCA on Tuesday, June 12, upgraded Kuwait's long-term foreign currency rating from A to A+ and gave a positive outlook for the oil-rich emirate.
The London-based agency also assigned short-term foreign currency ratings for Kuwait at F1.
Fitch's top short-term currency rating is F1, while its best long-term rating is AAA. “As the Kuwaiti economy is dominated by the oil sector, it has benefited substantially -- most notably in the fiscal and external accounts -- from higher world oil prices over the past 18 months," the agency said.
"With a 55 percent increase in the average Kuwaiti crude export price last year, the current account surplus more than doubled to $14.8 billion, making 39 percent of the Gross National Product (GDP).
"Foreign exchange reserves increased by 47 percent by year-end to $7.1 billion... The government surplus for the (nine-month) fiscal year that ended March 31 was $8.9 billion (29 percent of GDP)," it said.
Fitch estimated the public sector's external holdings to be well in excess of $100 billion, generating returns estimated at $7.5 billion last year, the second largest source of income after oil.
Foreign assets managed by Kuwait Investment Authority are estimated at $60 billion, down from more than $100 billion before Iraq's invasion of 1990.
But several other government and semi-governmental institutions also have their own foreign investments, including some $12 billion belonging to Kuwait Petroleum Corp., the emirate's oil conglomerate.
In the past two years, Kuwait posted huge surpluses after several years of deficits.
The emirate is projecting a deficit of $6 billion for the 2001-2002 financial year, which began in April, but economists predict a healthy surplus for a third year running.
Oil revenues, which account for more than 85 percent of the emirate's income, were calculated on the basis of a conservative price of $15 per barrel. Kuwaiti crude is currently trading at around $25 a barrel. — (AFP)
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