Kuwait sees $3.5bn fall in 2013/14 spending
Kuwait, July 18, 2013
Kuwait expects to spend around one billion dinars ($3.5 billion) less in the 2013/14 fiscal year, according to the state budget published by the Ministry of Finance, despite the major oil producer forecasting higher revenue.
Oil-producing Kuwait, one of the world's richest countries per capita, hiked state spending by 13 percent in the last fiscal year as it grappled with a wave of industrial unrest.
However, since then, the International Monetary Fund warned Kuwait risks exhausting all of its oil savings by 2017 if it keeps spending money at the current rate.
A recently approved budget bill estimated overall revenues, after deducting 25 percent for the Future Generations Fund (FGF), at 13.57 billion dinars compared with an expected total expenditure estimated at about 21 billion dinars, Kuwait's state news agency (KUNA) reported citing Khalifa Hamada, undersecretary at the ministry of finance.
This compares to revenues of 14 billion dinars before the FGF deduction and expenditures of 22 billion dinars in the previous fiscal year.
In a bid to invest more efficiently, Kuwait announced last September that it would more than double the portion of revenues it puts into a rainy day fund for when oil runs out or the economy faces severe shocks.
The Opec member's state budget for the 2013/2014 fiscal year is projected to face a deficit of around 7.43 billion dinars ($26 billion), Hamada said.
Although the plan assumes a budget deficit, global oil prices are currently trading well above $100, so Kuwait may well post a surplus during this fiscal year. Kuwait's budget assumes a hypothetical price for oil of $70 per barrel.
KUNA said that Kuwait had projected a budget deficit for the last 14 fiscal years but the country had ended up with a healthy surplus on each occasion.
Kuwait booked a record budget surplus of 13.2 billion dinars in 2011/2012 thanks to strong oil income and lower spending.
In March, Kuwait said it had a budget surplus of 17.2 billion dinars in the first ten months of its 2012/13 fiscal year, according to preliminary data, thanks to robust oil income and lower-than-expected public spending.
Hamada added that the approved budget for the fiscal year ending in March 2014 estimated oil revenues at 16.88 billion dinars, about 93.3 percent of the total state revenues, and non-oil revenues at 1.21 billion dinars, or 6.7 percent of the overall revenues.
He also noted that up to 4.52 billion dinars of the overall revenues were allocated for the Future Generations Fund, managed by Kuwait Investment Authority. – Reuters