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. Read more: One of the World’s Richest Petrostates Is Running Out of Cash. […] On the upside, Kuwait has a vast stock of sovereign assets held in the Future Generations Fund (FGF) which Moody’s estimates at 359% of GDP as of the end of fiscal year 2019/20. The FGF is savings fund for future generations where assets are invested outside of Kuwait. 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. These assets are not disclosed but we estimate their value at USD527 billion or around 380% of Kuwait’s GDP at the end of the fiscal year ending March 2020 (FY19/20), constituting the bulk of Kuwait’s sovereign net foreign asset position of 471% of GDP. Since 1953, the Kuwaiti government has directed investments into Europe, United States and Asia Pacific.As of 2015, the holdings were valued at $592 billion in assets. Kuwait is yet to see a consensus build up over whether it should be using its Future Generations Fund to tackle the economic fallout from the ongoing COVID-19 pandemic. 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. Note: Data for 2020 onward are projections by S&P analysts. At current oil prices, Kuwait only has two fiscal years’ worth of liquid assets in its Treasury before it will need to tap its Future Generations Fund or bond markets. Kuwait's net financial assets are set to continue dropping in coming years. Moody’s projects net sovereign issuance of up to 27.6 billion dinars ($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. However, in December 1992 Grupo Torras entered receivership among accusations of fraud, and Kuwait's investment was a total loss. 2012) Synopsis Fund Highlights • Kuwait’s Future Generations Fund was established as a long-term savings fund in 1976 by decree of the Deputy Emir. Today, the KIA manages two main funds: the General Reserve Fund (GRF) and the Future Generations Fund (FGF). The General Reserve Fund has been tapped so aggressively that its liquid assets could come close to being depleted within the current fiscal year, or by April 2021. The Kuwait Investment Authority (KIA) is Kuwait's sovereign wealth fund, managing body, specializing in local and foreign investment. “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. market instruments. The KIA may also manage any other funds entrusted to it by the Minister of Finance. Kuwait City: Kuwait, one of the world’s wealthiest countries, is in a budget crunch so severe that it may have to soon begin leaning on a fund intended to prepare it for a future without oil. Kuwait’s Future Generations Fund $290 billion (est. Assets of the Kuwait Investment Authority (KIA), the oldest sovereign wealth fund (SWF) in the world, have continued to grow despite the oil price shocks, according to Moody’s Investors Service. Officials at the Kuwait Investment Authority, which oversees the funds, couldn’t be reached for comment. In 1976, Kuwait’s Crown Prince Jaber al-Ahmed al-Jaber al-Sabah who was the deputy emir of Kuwait issued a law creating the Future Generations Fund. One of its projects was the Gate of Europe twin towers in Madrid, which was still incomplete when the company collapsed. To put KIA's size into perspective, the Kuwait Future Generations Fund has 15% of annual oil revenues added to it. “In the continued absence of legal authorization to issue debt or draw on the sovereign wealth fund assets held in the Future Generations Fund, … [7], The Kuwait Investment Authority has an infrastructure arm and signed an agreement to acquire the oil and gas pipeline firm North Sea Midstream Partners Limited for approximately 1.3 billion GBP in 2018. The current conjuncture and the exhaustible nature of oil underscore the need to diversify the economy and ensure adequate savings for future generations. Established in 1976, the Future Generations Fund invests state revenue abroad. It is the 5th largest sovereign wealth fund in the world. Have a confidential tip for our reporters? [9], International Forum of Sovereign Wealth Funds, "China grants Kuwait highest investment quota", "Kuwait SWF to Purchase North Sea Midstream Partners Limited", "Missing Millions -- Kuwait's Bad Bet -- A special report. The Kuwait Investment Authority (KIA) manages the assets of Kuwait’s Future Generations Fund (FGF). Running a deficit that could reach 40 per cent of its economy this year, and unable to borrow due to a showdown between the government and parliament, Kuwait is running out of options. A former finance minister, Bader Mishari Al Humaidhi, said the Fund was set up to be used in [future] critical times and not for the present. The fund’s assets and income therefrom are available for use by the State of Kuwait as determined by the passage of the state’s annual budget in parliament. Kuwait is running a deficit that could reach 40 percent of its economy this year, and unable to borrow due to a showdown between the government and parliament, Kuwait is running out of options. The KIA is an asset manager, and does not own any of the assets it manages, all of which are owned by the State of Kuwait. “In the continued absence of legal authorization to issue debt or draw on the sovereign wealth fund assets held in the Future Generations Fund, … 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. KIA's board of directors is headed by the minister of finance[5] with other seats allocated to the Energy Minister, Governor of the Central Bank of Kuwait, Undersecretary of the Ministry of Finance, and 5 other nationals who are experts in the field, 3 of which should not hold any other public office. Kuwait’s dollar bonds fell, with the yield on the $3.5 billion security due 2022 rising 14 basis points to 1.08%, the highest since June. In the continued absence of legal authorization to issue debt or draw on the sovereign wealth fund assets held in the Future Generations Fund (FGF), available liquid resources are nearing depletion, introducing liquidity risk despite Kuwait’s extraordinary fiscal strength. “In the continued absence of legal authorisation 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. AstraZeneca-Oxford Covid Vaccine Gains First Clearance With U.K. Nod, U.S. Vaccinations at 200,000 a Day Run Far Short of ‘Warp Speed’, Covid Variant in U.S.; Biden to Speed Vaccinations: Virus Update, Moderna Vaccine Shipments to Texas Delayed by Temperature Snag, Small Caps Lead U.S. Stock Gains; Dollar Weakens: Markets Wrap, Measures passed by lawmakers so far, including the removal of the mandatory annual transfer of 10% 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 20 billion dinars in Kuwait’s draft law would be reached in less than two years under Moody’s baseline scenario. “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. 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