RTTNews - Thursday, Fitch Ratings affirmed Kuwait's long term foreign and local currency Issuer Default Rating IDR at 'AA', with stable outlooks. The firm also affirmed the short-term foreign currency IDR at 'F1+' and the country ceiling at 'AA+'.
Kuwait has been hit by the fall in oil prices and falling global equity markets, but these have only temporarily halted the growth in its external assets, Charles Seville, Associate Director in Fitch's Sovereign and International Public Finance team said.
However, the financial sector is suffering from the spill-over of the global financial crisis and the after-effects of a domestic lending boom, Seville added.
Kuwait is the world's fourth-largest oil exporter and Fitch estimates its reserves at 100 billion barrels of oil, or 100 years of production. Hydrocarbon reserves per capita are the third-highest in the world, behind Abu Dhabi and Qatar.
The country's strength was its sovereign external balance sheet, one of the strongest among countries rated by Fitch. The report said the sovereign net foreign assets stood at US$256 billion or 174% of GDP at the end of 2008, superior to that of Saudi Arabia and comparable to that of Abu Dhabi. Sovereign external assets minus central bank reserves are equivalent to six years of government spending at fiscal year ( April 2008- March 2009) levels, the rating agency said.
Fitch said Kuwait's public finances were the most resilient to drop in oil prices,among the other oil producing countries rated by Fitch. The firm therefore forecasts Kuwait to record a general government surplus next year, including a government investment income of 19% of GDP and a current account surplus at a similar level. Moreover, the firm expects Kuwait to continue to accumulate external assets through 2011.
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