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Fri 27 Mar 2009 08:29 AM

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Kuwait faces up to $16.5bn budget deficit

Minister of Finance says shortfall due to increased spending and retreating oil revenues.

Kuwait's Minister of Finance Mustafa Al-Shimali has said the country would face a budget deficit of KD4.8 billion ($16.5bn) in the fiscal year 2009-2010 due to the increasing expenditure and retreating revenues.

The minister said the deficit, representing 60 percent of the projected revenues of the coming financial year, will be covered by the reserve funds of the state budget.

The expenditure of the draft state budget is estimated at KD12.1 billion while the revenues are put at KD8 billion, Al-Shimali said in comments published by news agency KUNA.

A cabinet meeting on Thursday reviewed the draft budget and probed oil revenues which are the main source of Kuwait's national income, it added.

Projected oil revenues have been set based on an average price of $35 per barrel which is a highly precautionary estimation, Al-Shimali added.

The main feature of the draft state budget is the dramatic retreat of oil revenues by 40.6 percent compared with the revenues of 2008-2009, the minister noted.

However, non-oil revenues are set to grow by 12.1 percent, he said, pointing out that the total value of revenues will go down by 36.3 percent.