The Government of the Hong Kong Special Administrative Region (HKSAR) Tuesday welcomed Fitch's decision to upgrade its long-term foreign currency rating outlook on Hong Kong to "Positive" from "Stable".

At the same time, Fitch also affirmed Hong Kong's long-term foreign currency rating at "AA-" and long-term local currency rating at "AA+" with a stable outlook.

In its press statement announcing the rating decision, Fitch attributed the upgrade in outlook to Hong Kong's strong external financial position, continued improvements in public finances, the Government's commitment to addressing structural fiscal issues and reduced exposure to the Chinese mainland risks.

Fitch acknowledged that Hong Kong's current account surplus, at 11.4 percent of GDP in 2005, and Hong Kong's international reserves, at 3.8 months of currency external payments, are far better results than that of the "AA" median.

Financial Secretary of the Government of the HKSAR Henry Tang said that the upgrade reflected international recognition of Hong Kong's improved public finances and growth prospects.

He added that the Government would continue to exercise fiscal discipline and to explore ways to broaden the tax base.

"We note the concerns expressed by Fitch for the potential risks related to the fact that Hong Kong is part of China. We hope that 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," Tang noted.

Fitch last affirmed its foreign currency sovereign rating on Hong Kong at "AA-" in May 2005. It last raised Hong Kong's rating outlook to "Stable" from "Negative" in May 2004.