Kuwait posts $25 billion budget surplus

KUWAIT CITY: OPEC member Kuwait posted a preliminary budget surplus of $25.2 billion in the first nine months of the current fiscal year on higher oil income, the Finance Ministry said on Wednesday.

The ministry said on its website that revenues until the end of December reached $45 billion, 60 percent above the $28.1 billion projected for the whole 2009-2010 fiscal year, which ends on March 31.

That income is, however, far below the $64.4 billion earned in the first nine months of the previous fiscal year when oil prices shot above $147 a barrel.

Spending during the nine months was 19.8 billion dollars, just 46.9 percent of projected spending for the whole year of $42.1 billion, the ministry figures showed.

The huge surplus is expected to be lower at the end of the fiscal year due to end-of-year accounting adjustments when pledged expenditure not included so far will be added to the closing statements.

Oil income up to the end of December came to $42.4 billion or 75.9 percent above budget projections for the whole year of $24.1 billion. Oil revenues constituted 94.3 percent of total income.

The figure is far below the $61 billion of oil income in the same period of the previous fiscal year.

Kuwait, the fourth largest OPEC producer, has projected a deficit of $13.8 billion for the current fiscal year after calculating oil income at a conservative price of $35 a barrel.

Oil prices have ranged between $70 and $80 for most of the year.

Kuwait has projected shortfalls in the past 10 fiscal years but eventually ended with a massive surplus in all of them.

The Gulf state finished last fiscal year with a surplus of $9.6 billion despite making a one-off payment of $19 billion to the state pension fund.

This would be Kuwait’s 11th straight year of budget surplus. In the past 10 years, it has accumulated around $123 billion of budget surplus, based on available official data.

The emirate has been investing its savings abroad through the Kuwait Investment Authority, the sovereign wealth fund whose assets are estimated at around $230 billion.

Kuwait says it sits on 10 percent of global crude reserves and pumps around 2.2 million barrels per day. It has a citizen population of 1.1 million, and 2.34 million foreign residents.

Earlier, Kuwait’s Parliament approved a 30 billion dinar ($104.3 billion) four-year development plan on Tuesday aimed at decreasing the Gulf Arab state’s dependence on oil, and boosting private sector participation in projects.

“It is estimated at 30 billion dinars,” Deputy Prime Minister for Economic Affairs Sheikh Ahmad Al-Fahad Al-Sabah told Parliament on Tuesday before the vote.

The plan, which runs to 2014, also includes investment on raising oil and natural gas production.

The package should also attract more investments into the Gulf Arab state and boost participation of the private sector in government projects.

“We will try to reach 7 billion dinars (of spending) in the first year, some 4 billion dinars for government investments and the rest for the private sector’s investments,” Sheikh Ahmad said. He said the plan would take effect on April 1, 2010, at the beginning of the OPEC member’s fiscal year.

After Tuesday’s Parliament vote, the draft will go back to the Cabinet and then to the ruler for final approval.

On Monday, the Cabinet approved a 4.78 billion dinars bill for the development plan for the 2010/11 fiscal year.

Kuwait, the world’s fourth-largest oil exporter, is expected to spend 12 billion-15 billion dinars in its 2010/11 budget, Finance Minister Mustapha Al-Shamali said last month.

The 2010/11 budget, which includes spending on projects in the government’s development plan, will be based on an oil price of $43 a barrel, Al-Shamali said on Monday.

Kuwait’s Parliament on Tuesday approved a much-delayed bill to set up a stock market watchdog, in a move to boost transparency and attract more foreign investors.

Kuwait, home to the second-largest Arab stock market, is the only Gulf state which does not have a dedicated authority to supervise its bourse, which has been plagued with irregularities in prices and disclosure.

The 165-article bill, passed by a nearly unanimous vote, calls for the creation of a stock market regulator monitored by the minister of commerce. The draft needs the final approval of the Cabinet and the country’s ruler before it takes effect.

The authority will oversee initial public offerings, mergers and acquisitions, and will have the power to impose fines of up to 100,000 dinars ($347,700) and prison sentences of up to five years for violations.

It will have the power to halt or cancel trading in the bourse in case of crisis or unrest which could damage the stock market. The authority will also be able to do the same in the case of stock manipulation by traders.

The five members of the authority will be proposed by the commerce minister, and the body will have to submit an annual report to him.

Like other bourses in the Gulf Arab region, Kuwait’s market says it is trying to crack down on abuses that for years helped deter foreign investment in its shares, although it has relatively little power to act.

Little corporate data has to be released and some companies leak market-moving news or even release their results first in the local press, late at night or over the weekend, to the dismay of investors.

Kuwaiti newspapers often carry unsourced reports, accurate or false, but officials rarely respond to requests for confirmation.