Kuwait's gov't budget surplus shrinks 26% on lower oil prices

National Bank of Kuwait analysts calculates surplus as nearly $36bn in first nine months of fiscal year
Kuwait's gov't budget surplus shrinks 26% on lower oil prices
(Photo for illustrative purposes only)
By Reuters
Sun 22 Feb 2015 01:54 PM

Kuwait's government budget surplus shrank 26 percent in the first nine months of this fiscal year as lower oil prices cut revenue sharply, analysts at National Bank of Kuwait (NBK) calculated, using Ministry of Finance data.

The surplus totalled 10.6 billion dinars ($35.9 billion) between April and December, down from 14.3 billion dinars a year earlier.

The plunge in oil prices since last June has squeezed state finances and if Brent crude stays at its current level of around $60 a barrel in the coming year, some analysts believe Kuwait could run a budget deficit or come close to it.

NBK, the country's largest bank, predicted the surplus for the full fiscal year to the end of March would total 4.1 billion dinars, the smallest surplus in six years, though it would still be large by international standards at 8.7 percent of gross domestic product.

Government spending rose 10 percent to 10.6 billion dinars in the first nine months of the fiscal year. Capital spending surged 31 percent to 900 million dinars, or 39 percent of the budget's annual allocation for capital spending.

Actual expenditure has repeatedly fallen far behind budget plans in recent years as political disputes and bureaucracy have delayed the implementation of economic development projects.

In past years, an average of only 35 percent of budgeted allocations for capital projects were spent by December; the rise of this ratio to 39 percent suggests the government's ability to push through projects is improving, NBK said.

Government revenue in the first nine months of this fiscal year dropped 12 percent to 21.2 billion dinars. Oil revenue, which account for over 90 percent of state revenue, fell 13 percent.

Last month the government released a draft budget for next fiscal year that projected a deficit of 8.23 billion dinars, assuming an average oil price of $45.

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