Kuwaiti fiscal surplus put at over KD10bn

OPEC oil producer Kuwait is expected to bask under another fiscal surplus of more than KD10 billion (Dh130 billion) in the current fiscal year because of high crude prices and lower spending, a Kuwaiti bank has said.

National Bank of Kuwait (NBK) assumed three cases for the surplus involving lower oil prices and spending, a base case and a high case.

In the three cases, the surplus in fiscal 2011-2012 will range between KD10.28 billion and KD11.68 billion (Dh133-152 billion) before allocations to the Reserve Fund for Future Generations (RFFG), it said.

The report said its projection for the budget surplus is lower than the KD 14.4 billion surplus revealed by official figures for the first ten months of the current fiscal year, which ends on March 31.

But it added that public spending usually accelerates towards the end of the fiscal year, pushing the surplus back down.

The report assumed an oil price of $108.4 and spending at KD19.4 billion in the low case, $108.7 a barrel and KD17.9 billion in the basic case and $109 a barrel and KD17.4 billion spending in the high case.

“The outlook for next year contains a great deal of uncertainty, but based upon recent press reports of the government’s proposed budget, fiscal year 2012/2013 could see another huge surplus,” it said.

In the official projections, expenditure is projected to rise by 13 per cent to KD 22 billion (Dh286 billion) and oil prices are assumed to average an ultra conservative $65, resulting in a projected KDeight billion budget deficit.

“Based upon our price scenarios above, however, and assuming that spending comes in below budget, we project a surplus of between KD 4.8 billion and KD 15.5 billion before allocations to the RFFG.”

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