Fitch Upgrades Hong Kong's Foreign Currency Outlook

by Mary Swire, Tax-News.com, Hong Kong

26 July 2006

Fitch Ratings on Monday revised the outlook on Hong Kong's long-term foreign currency Issuer Default Rating to Positive from Stable.

At the same time, the agency affirmed all the ratings on the SAR as follows: long-term foreign currency IDR at 'AA-', long-term local currency IDR at 'AA+', short-term foreign currency IDR at 'F1+' and the Country Ceiling at 'AA'. The outlook on the Long-term local currency IDR remains Stable.

"The revision in the rating Outlook mainly reflects Hong Kong's strong external financial position and the continued rejuvenation of its public finances. The Hong Kong government's commitment to addressing structural fiscal issues and the territory's reduced exposure to risk from China, which was upgraded last year, are also major supportive factors," explained Vincent Ho, associate director in Fitch's Asia Sovereign ratings group.

Hong Kong Financial Secretary Henry Tang welcomed rating the decision, observing on Tuesday that the upgrade reflected international recognition of Hong Kong's improved public finances and growth prospects, and adding the Government will continue to exercise fiscal discipline and to explore ways to broaden the tax base.

'"We hope the solid track record in the strict adherence to the 'one country, two systems' principle will convince international credit-rating agencies to accord us a higher rating that is in line with our economic fundamentals," Mr Tang added.

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