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Fri 7 Oct 2011 10:15 AM

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Kuwait budget surplus rises to $29.2bn on oil income

Surplus accounts for 22% of the OPEC member's gross domestic product, data shows

Kuwait budget surplus rises to $29.2bn on oil income
Kuwait City, the capital of Kuwait

Kuwait's budget surplus rose to KD8.1bn ($29.2bn) in the first five months of its 2011-12 fiscal year, much larger than a year ago on higher than expected oil revenue and lower spending, finance ministry data showed on Thursday.

The surplus accounted for 22 percent of the OPEC member's gross domestic product, according to Reuters calculations. It stood at KD4.6bn in the same period a year ago and at KD6.8bn in April-July.

Revenue of the world's sixth-largest oil exporter was KD11.9bn in April-August, while spending came at 3.7 billion, below a projected KD8.1bn, the data showed.

Oil revenue reached KD11.3bn in April-August, accounting for 95 percent of the total. The 2011-12 budget is based on an oil price of $60 per barrel.

Brent crude prices have been floating between $98 and $127 per barrel since the fiscal year started in April.

On Thursday, prices rose around $1 per barrel with US futures touching $80.6 per barrel on expectations Europe would support its banks and as data suggested global growth may be slightly stronger than anticipated.

Since 2004, Kuwait's budget spending has tripled to a record KD19.4bn planned for the 2011-12 fiscal year, which started in April, with expenditure on wages rising almost as fast.

Revenue was set at KD13.4bn in the 2011-12 budget, approved by parliament in June, bringing the projected deficit to KD5.99bn, or 16.2 percent of gross domestic product, according to Reuters calculations.

However, the 2011-12 revenue estimate is very conservative given this year's surge in the price of oil.

In August, Kuwait's ruler said the misuse of budget surplus, including unproductive spending, has led to structural imbalances in the Gulf Arab economy.

The Gulf Arab country of 3.6 million people has no plans to boost budget spending in the next fiscal year, nor does it expect budget cuts in coming months, its finance minister said last month.

A Reuters poll in September forecast Kuwait's economy would grow 4.7 percent in 2011 and generate a fiscal surplus of 21.4 percent of GDP in 2011-12, the largest among Gulf Arab oil exporters.