At the end of the fiscal year, in March 2008, the country had a fiscal surplus of morew than 40 per cent of gross domestic product.

“High oil prices have generated a large revenue windfall which Kuwait has largely used to strengthen its external balance sheet,” says Charles Seville, associate director at Fitch.

“The strong external balance sheet offers a sizeable cushion in the event of a major fall in oil prices, which is still the main economic risk,” he adds.

Fitch says in its analysis that under the present budget, the oil price would have to fall below $50 per barrel to erase the fiscal surplus, and that the break-even oil price was closer to $25 per barrel.