Kuwait budget surplus tumbles on gov't spending

SPENDING IMPACT: Kuwait's budget surplus for 2007/08 has dropped almost 19 percent. (Getty Images)

Kuwait posted a 2007/08 budget surplus of 9.32 billions ($35.17 billion) dinars, almost 19 percent lower than an preliminary forecast due to an expenditure hike, government data showed on Tuesday.

Revenues in the world's seventh-largest oil producer were a little over 19 billion dinars in the year to March 31, compared with a forecast of 18.93 billion dinars in March as oil prices soared, according to the data obtained by newswire Reuters.

Expenditure stood at 9.69 billion dinars, up from an earlier forecast of 7.49 billion dinars, the data showed.

In March, the government forecast a surplus of 11.44 billion dinars based on 12 months of data but some ministries are often late reporting actual spending.

Oil revenues were 17.72 billion dinars, compared with 7.45 billion dinars forecast in the budget at the start of the fiscal year, based on a conservative oil price forecast of $36 per barrel, the data showed.

US crude, which trades at a premium to Kuwaiti crude, rose near $146 per barrel on Tuesday.

Kuwait invests 10 percent of its revenues in a fund for future generations, which is managed by state-run Kuwait Investment Authority (KIA). After the payment, the surplus amounts to 7.42 billion dinars, the data shows.

Kuwait's surplus in the 2006/2007 fiscal year was 3.652 billion dinars, according to the final figures.

Kuwait's parliament approved last month the 2008/09 budget with record expenditure of 19 billion dinars, despite warnings by the central bank to contain spending to tackle record inflation.

The new budget is based on an oil price of $50 per barrel.

KIA, the OPEC producer's sovereign wealth fund, is considering investing in the financial industry and might consider raising its stakes in US banks Citigroup and Merrill Lynch if a good opportunity came up, KIA Managing Director Bader Al-Saad told Reuters in June.

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