HONG KONG, Jan 6 (AP) -- Macao's booming tourism industry is filling the local government's coffers, ensuring it won't need to issue debt for some time, Moody's Investors Service said in its annual review of the Chinese territory's economic prospects.

"Overall the economic boom is being fueled by new investment in the gaming industry, Macao's most important source of foreign exchange and government revenues," Moody's analysts wrote in their report.

"Macao enjoys an excellent fiscal position, with notable public sector surpluses over the past four years."

Macao liberalized its casino sector in 2002, breaking the longtime monopoly of local tycoon Stanley Ho and granting new concessions to units of major U.S. gaming companies. That spurred the construction of several new casinos and hotels, which was accompanied by a boom in tourist traffic from mainland China and Hong Kong where casino gambling isn't permitted.

The local economy grew 29 percent in 2004 and, according to Moody's estimates, is on track for a 7 percent expansion in 2005.

But while gambling and tourism are the backbone of Macao's newfound prosperity, the territory has few other economic drivers. The local textile industry has collapsed as the expiration of an international quota system in 2005 encouraged producers to relocate to lower-cost locations, such as mainland China.

Moody's noted that tourist traffic can be highly volatile and that "changes in regulations in other jurisdictions could increase competition."

Singapore is now planning to build two casinos, the first of which could open as early as 2009.

"Though this sector looks set to grow rapidly in the years to come, it is an industry that is highly vulnerable to global growth trends," Moody's said, pointing out the Macao government now derives more than 70 percent of its revenue from gambling.

Macao has held an investment-grade credit rating of A1 from Moody's since 2003, meaning that it could borrow fairly cheaply on the international debt market if it chose to. Moody's said the government had total reserves of about US$5 billion as of September 2005, and has no outstanding debt.

The former Portuguese enclave, a peninsula and two small islands inhabited by fewer than half a million people, is located about 60 kilometers (37 miles) west of Hong Kong. Since 1999, Macao has been governed, like Hong Kong, as a semiautonomous special administrative region of China.