KUWAIT CITY, 20 March 2005 — Kuwait is set to post its largest budget surplus ever in fiscal 2004-5 on the back of high oil prices and a rise in production, official statistics show.
Figures posted on the Finance Ministry’s website yesterday show that total revenues in the first 11 months of the year reached eight billion dinars ($27.1 billion), up on the $11.25 billion projected for the whole year. Actual oil revenues reached $25 billion, up 31 percent on the corresponding period in 2003-4 of $19 billion and almost triple the budget projection for the whole current year of $9.27 billion.
The government calculated oil income on the basis of an ultra-conservative price of $15 a barrel at a daily output of two million barrels. But Kuwaiti oil has actually fetched an average of more than $35 a barrel in the past 11 months and earlier this week it hit the highest level ever of $46.22 a barrel. The emirate is pumping at full capacity of 2.6 million barrels per day (bpd), some 500,000 bpd above its OPEC quota.
Oil income in February jumped to $2.6 billion, up 44 percent on January. The month saw the third largest monthly income from oil after November and September. March is expected to boast the largest oil revenues of the year because both the price and output increased considerably. Accordingly, the emirate is tipped to finish the year with income of more than $30 billion, the highest ever. Kuwait’s fiscal year runs from April 1 to March 31.
Actual spending until the end of February was 4.287 billion dinars ($14.5 billion), way below budget projections for the whole year of $22 billion. But the figure is expected to rise considerably after making financial adjustments at the end of the fiscal year.
National Bank of Kuwait (NBK) said in its latest economic report that in the first 10 months of the year, government spending grew 13 percent over last year’s figures. Independent economic reports have forecast a surplus of around $10 billion, twice the windfall posted in 2003-4 of $4.8 billion.
This will be the sixth year in a row that Kuwait boasts a surplus due to high oil prices following almost two decades of deficits because of weak prices and costs associated with the 1990 Iraqi occupation and the Gulf war of the following year.
The emirate posted surpluses totaling more than $21.3 billion over the past five fiscal years. Returns on foreign assets, estimated at more than $90 billion, are not included in the budget.
The 2005-6 budget forecasts a deficit of $7.9 billion, with projected revenues of $15.6 billion and spending of $23.5 billion. But it too is based on a conservative oil price projection of $21 a barrel. Between 1990 and 1999, the emirate incurred accumulated deficits of 21.1 billion dinars ($70 billion) and managed a surplus of 210 million dollars only in the 1996-7 fiscal year. However, more than 61 percent of the total deficits came in the first two years of the last decade to finance the 1991 Gulf war.
