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19 April 2024

Kuwait to post KD3.7bn surplus

By Reuters

Kuwait is expected to post a budget surplus of up to KD3.7 billion (Dh46bn) in the fiscal year 2008-09 ending in March due to higher oil revenues, National Bank of Kuwait said.

Oil revenues in the world's seventh-largest oil exporter would be higher than expected due to a stronger dollar, NBK said in a research note. Kuwait's biggest bank had in December forecast a surplus of KD1.8bn.

The Gulf state has depreciated its dinar below levels before it dropped a dollar peg in May 2007 in what analysts say is aimed at offsetting a recent rise in the dollar and boosting oil revenues paid in dollar.

Yesterday, the central bank let the dinar reference rate fall to 0.59 per cent below dollar levels since the depegging. The Opec producer posted a budget surplus of KD6.78bn in the first 10 months.

For 2009-10, NBK said Kuwait could post a surplus of up to KD7.1bn or in a worst case scenario a deficit of KD1.7bn, due to uncertainties over the oil price.

Kuwait will base its new budget on a preliminary oil price of $35 a barrel, down from $50 last year, the head of the budget committee said this month. The cabinet has yet to approve the figure.

Kuwait crude, the country's main earner, fell to $37.19 a barrel, state news agency Kuna said on Thursday.

Meanwhile, Commercial Bank of Kuwait (CBK) Chief Executive Jamal Al Mutawa urged the Gulf state's central bank to further reduce interest rates to help shore up the economy.

Kuwait last lowered its benchmark discount rate by 50 basis points to 3.75 per cent in December and has slashed the rate by 200 basis points since October.

"The central bank should take a step towards reducing the interest rate… according to the current circumstances, which will reflect positively on the economy," Al Mutawa told Al Wasat daily.

"The [cut] would take away the biggest burden firms suffer from, which is the debt service," he said.

Several Kuwaiti investment firms have been struggling to refinance debt because banks have been reluctant to lend.

The central bank governor said earlier this month the country's key discount rate was at an "appropriate" level.