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Tue 16 Aug 2011 05:56 PM

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NBK sees Kuwait's budget surplus at $42bn this year

If bank's estimates are right, this would be Kuwait's 13th successive budget surplus

NBK sees Kuwait's budget surplus at $42bn this year

Kuwait may post a budget surplus of as much as KD11.4bn ($41.8bn) based on projections that average oil prices will be between $104 and $112 a barrel for the whole of this fiscal year, the National Bank of Kuwait (NBK) said.

The government is projecting a budget deficit of KD6bn in the current fiscal year which ends on March 31, based on an oil price of $60 a barrel. Spending is forecast at KD19.4bn, the highest in Kuwait’s history, and revenue at KD13.5bn.

“If, as we expect, spending comes in at 5 to 10 percent below the government’s forecast, the budget could see a surplus of between KD7.3bn and KD11.4bn,” the country’s largest commercial bank forecast in an e-mailed report on Tuesday.

NBK’s estimates are before the allocation of 10 percent of revenue in the Reserve Fund for Future Generations as required by law.

If the bank’s estimates are correct, this would be the state’s 13th successive budget surplus, according to the report.

Crude for September delivery was trading at $86.96 a barrel on the New York Mercantile Exchange at 2:01 pm in Kuwait.

Kuwait’s budget surplus reached a record of KD5.3bn in the last fiscal year. Income was KD21.5bn dinars, more than double projections, while spending was KD16.2bn, or 7 percent lower than estimates, according to final data posted on the Finance Ministry website on August 11.

Kuwait is the fourth-biggest producer, along with the UAE in the Organisation of Petroleum Exporting Countries, and pumped 2.5 million barrels a day last June according to Bloomberg data.