Monday, August 08, 2011

Economic Downturn Hits the Kingdom

08/08/2011--FIRST CITY--Stock markets around the world fell today as the effects of Standard & Poor's downgrade of the United States was truly felt. In Kemetia, government assets invested in international markets took a severe hit, damaging the government's portfolio and financial strength.

Shares held in numerous institutions by the Government caused an overall loss of 32.72% of government resources, completely wiping out gains made earlier this year. Such a fall is estimated to amount to upwards of 1800 Db in losses, a large amount not expected to be made up any time soon, according to economic analysts.

Kemetia has managed to remain relatively unscathed by the financial crisis, due to the Kingdom's lack of a stock market and the government's choice to hold most of its assets in cash rather than equities. The Foreign Market Portfolio, officially held by the Privy Purse, has come to serve as a source for some government income, although it is not a major generator of wealth. It is unclear whether the Portfolio will remain a viable avenue for meeting expenditure given the current economic climate.

The government has so far not commented on the situation, and the absence of Finance Minister creates an awkward situation for the Lloyd-Davies Administration in this time of financial peril. His Sovereign Majesty's office told the Tribune that it was looking into the possibility of liquidating the Portfolio and moving into a more solid investment, such as gold or silver.

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