By Courtney Trenwith
Gulf state is on track to record its first deficit in 17 years in 2015-16 due to oil price slump
Kuwait’s revenues dropped by one-fifth in the first 11 months of the fiscal year due to the decline in global oil prices, according to figures released by the finance ministry, AFP reported.
Revenues reached KD23.2bn ($77.2bn) until the end of February from KD28.9b at the same time last year, a decline of 19.7 percent. Kuwait’s fiscal year runs April-March.
Oil revenues fell 27.4 percent from KD27bn last year to KD21.2bn. However, oil income still accounted for 91.4 percent of total public income, the ministry said.
Kuwait, and the other five GCC states, have been hit hard by the 60 percent decline in global oil prices since June.
Kuwaiti oil averaged well above $100 a barrel last fiscal year but has slumped to about $50.
The state is one of the worst hit, with less than 10 percent of total public revenue derived from other sources.
At the same time Kuwait’s spending has soared, particularly on subsidies and public employee salaries.
The finance ministry said it expected to post a budget surplus of KD9.9bn this fiscal year, its 16th consecutive surplus.
However, it is expecting to record a deficit of KD7.2bn in 2015-16, after cutting its budgetary oil price from $75 to $45.
The International Monetary Fund has warned for several years the country risks recording its first deficit in two decades as early as 2017-18 if it did not reign in spending and diversify its economy but a hamstrung parliament has been able to do little until the past year.
Sustained surpluses since 2000 have boosted fiscal reserves of the country’s sovereign wealth fund to about $550bn, according to unofficial estimates.