By Dylan Bowman
Budget projects a deficit of more than $10.3 billion as country saves for time when oil runs out.
Kuwait's parliament approved the 2007/08 state budget on Wednesday with a projected deficit of more than 3 billion dinars ($10.3 billion). The world's seventh largest oil exporter based its budget on an oil price forecast of $36 per barrel and output of 2.2 million barrels per day.
Gulf Arab oil exporters usually use conservative crude price estimates in their budgets. Kuwaiti crude, which trades at a discount to benchmark US light sweet crude, was around $67 a barrel earlier this week.
Kuwait produced 2.42 million barrels per day in June, according to a Reuters survey.
Finance Minister Badr al-Humaidhi said on Tuesday expenditure would rise 5.2% to 11.3 billion dinars in 2007/08, while income was projected at 8.320 billion dinars.
He told reporters in parliament on Wednesday that 10% of revenues would be added to the Future Generation Fund, a nest egg for the time when oil runs out in about 100 years.
This will raise expenditures to 12.1 billion dinars and reduce revenues to 7.5 billion dinars, resulting in a deficit of 3.81 billion dinars.
Kuwait posted a budget surplus of 5.65 billion dinars in the fiscal year ending March 2007, its second-largest ever.
Kuwait's surplus oil wealth is invested by the state-owned Kuwait Investment Authority (KIA), which had at least $213 billion in assets under management on March 31, according to official figures.
KIA, which is the biggest shareholder in German car maker DaimlerChrysler, is looking to invest more in eastern Europe, Australia, Russia and Asian markets such as China and Vietnam, Executive Director Saleh al-Sagoubi said earlier this month.
The Future Generations Fund rose 30% to 50.147 billion dinars in the last budget year to March 31.
It was was set up in 1976 and is managed by KIA and its overseas unit, the London-based Kuwait Investment Office, according to the KIA's web site.