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Friday , January 22 2021

$26.5b average annual net profit of Kuwaiti sovereign fund in 3 yrs

‘KIA makes net profit of KD 24.07b by investing state reserves’

KUWAIT CITY, June 6: A document obtained by the Al-Anba newspaper shows the Kuwait Investment Authority (KIA) has made a net profit of 24.07 billion dinars ($79.5 billion) by investing state reserves in the form of sovereign funds assets during fiscal 2014/2015, 2015/2016 and 2016 / 2017, reports Al-Anba daily.

The average annual net profit of Kuwaiti sovereign fund assets over the past three years is $26.5 billion, with an annual return of 4.5 percent according to Fitch Ratings for sovereign assets of $590 billion.

The Minister of Finance, Dr. Nayef Al-Hajraf had said earlier that the performance of the sovereign fund is very good and called it a ‘continuous growth’ and that there is no decline in the value of assets. Al-Hajraf said, “The total assets in the general reserve fund has reached approximately 26.4 billion dinars, distributed between cash assets and their equivalents, almost amounting to 13.2 billion dinars, and non-liquid investments of about KD 13.2 billion.” This is in terms of approximate amount of total assets in the general reserve fund until the end of the previous fiscal (2017/2018).

The document included mechanisms followed by the KIA to maintain public money and has taken all measures to protect it. He said, the KIA is a long term investor operating in accordance with a specific objective in terms of return and risk.

The level of risk, which is measured according to the standard deviation of the yield at the various periods in which this measure was achieved, is within the limits approved by the Board of Directors. He went on to say, the executive steps taken by the KIA are based on geographical distribution of investments that are determined in light of market growth rates as well as qualitative and sectoral distribution in order to attain the objectives according to the general strategy of the authority and the Kuwait economy in general. The KIA carries out its investment operations in accordance with a technical strategy and a fixed methodology, which is mostly a case of longterm investments depending on the type of assets of investment, he said. The Authority, he said, shall abide by the general policies set up by the Board of Directors, and follows up their implementation through investment strategies and their distribution in the various areas proposed by the Executive Committee deriving from the Board of Directors and approved by the Board.

Moreover, the KIA complies with the provisions of Law No. 1 of 1993 on the protection of public funds in order to maximize the protection of public funds to prevent any transgression on public money. The Authority shall comply with the provisions of Law No. 2 of 2016 on the establishment of the Anti- Corruption Public Authority and the provisions on financial disclosure, he said. The Audit Committee, he added, supports the Board of Directors in supervisory and oversight functions in terms of quality and safety of fi- nancial statements, compliance with regulations and legislations, independence and efficiency of external auditor, performance of internal and external audit and internal control systems.

The Committee shall establish a liaison center between the Board and the Executive Management and the external and internal auditor. The Committee shall prepare an annual report to be submitted to the Board of Directors of the KIA, together with the recommendations of the committee and the necessary decisions and procedures.

The Internal Audit Department of the Audit Committee will play the role of oversight and advisory activity in objective and independent manner. It also works to achieve added value, improve and develop the efficiency of the work of the Authority and its subsidiaries and to assist them in achieving their goals through a professional systematic approach to evaluate and develop the effectiveness of risk management systems as well as the internal control systems of processes, and other government control mechanisms exercised by the parties related to the Authority and its subsidiaries.

This is in addition to the existence of regulation approved by the board of directors that governs the work ethics and the rules of conduct. The provisions, rules and instructions established by these regulations represent the standards of the institutional culture of the Authority that keep abreast with its position in the international markets, and aim to promote the principles of excellence in performance and the establishment of an institutional culture based on professional ethics.

This will also include the adoption of the rules and regulations of the government in KIA, which aim to achieve the best performance of the Authority through an effective mechanism for decision-making and monitoring its implementation, and aims to activate the control on its various activities in order to achieve the best management methods in accordance with the best global practices. The Authority will also cooperate with the Audit Bureau in its financial and accounting control by providing its inspectors with the information and data they request and by facilitating their inspection and control tasks.

This is in addition to providing facilities and requirements for financial controllers from the Ministry of Finance to monitor the spending and verify that it conforms to the appropriations contained in the budget. Finally, the report said two External Officers will be appointed by the Board of Directors of the Authority to audit its financial statements and submit the report thereon annually to the National Assembly.

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