Economy of Kuwait - External Trade and Finance

External Trade and Finance

The Kuwaiti dinar is a strong currency pegged to a basket of currencies in which the U.S. dollar has the most weight. Kuwait ordinarily runs a balance-of-payments surplus.

Government revenues are dependent on oil revenues. Kuwait's fiscal surplus in 2000 was some 15% of GDP, while it reversed to a deficit of more than 2% of GDP in 2001 on sliding oil prices.

The government's two reserve funds: the Fund for Future Generations and the General Reserve Fund, which totalled nearly $100 billion prior to the invasion in 1990, were the primary source of capital for the Kuwaiti Government during the war. While these funds were depleted to $40–$50 billion after the war, they currently are estimated around $208 billion. The bulk of this reserve is invested in the United States, Germany, the United Kingdom, France, Japan, and Southeast Asia. In order of importance, foreign assets are believed to be invested in stocks and bonds, fixed yield instruments (mostly short term), and real estate. Kuwait follows a generally conservative investment policy.

Kuwait has been a major source of foreign economic assistance to other states through the Kuwait Fund for Arab Economic Development, an autonomous state institution created in 1961 on the pattern of Western and international development agencies. In 1974, the fund's lending mandate was expanded to include all – not just Arab – developing countries.

Over the years aid was provided to Egypt, Syria, and Jordan, as well as the Palestine Liberation Organization. During the Iran-Iraq war, significant Kuwaiti aid was given to the Iraqis. The Kuwait Fund issued loans and technical assistance grants totaling over $520 million during its fiscal year ending 30 June 2000.

The stock market capitalisation of listed companies in Kuwait was valued at $130,080 million in 2005 by the World Bank.