Kuwait to post $24 billion budget surplus this year

Kuwait is set to post a surplus of $24 billion (Dh88.15bn) in the current financial year on the back of higher oil prices, despite projecting a shortfall, an economic report forecast yesterday.

Revenues for the oil-rich emirate are expected to hit $61.8 billion in the year to March 31, far above budget projections of $28.1 billion, said the report by the private National Bank of Kuwait.

Oil income, which makes up about 94 per cent of total revenue, is expected to reach $57.8bn, also considerably higher than the budget forecast of just $24.1bn.

Kuwait calculated oil income at a conservative price of $35 a barrel, while average price for the year is expected to be double that at around $69.5, according to the report.

Spending is forecast to reach $37.8bn, about 10 per cent below budget projections of $42.1bn, the bank said. Kuwait, the fourth-largest producer in the Opec, posted a preliminary budget surplus of $25.2bn in the first nine months of the fiscal year, according to the finance ministry's website.

The huge surplus is expected to fall in the final quarter due to end-of-year accounting adjustments when pledged expenditure not included so far will be added to the closing statements.

Kuwait had projected a deficit of $13.8bn for the current fiscal year. The Gulf state has projected shortfalls in the past 10 fiscal years but eventually ended with a massive surplus in all of them.

It finished last fiscal year with a surplus of $9.6bn despite making a one-off payment of $19bn to the state pension fund.

This would be Kuwait's 11th straight year of budget surplus. In the past decade, it has accumulated about $123bn of budget surplus, based on official data.

The emirate, which transfers 10 per cent of revenues every year into its sovereign wealth fund run by the Kuwait Investment Authority, is estimated to have assets worth about $230bn. Kuwait says it sits on 10 per cent of global crude reserves and pumps about 2.2 million barrels per day.

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