Kuwait announced a budget surplus of 2.74 billion dinars (Dh34.96bn) in the past financial year as higher crude prices boosted its revenues. Analysts say the country could be on course for another budget surplus next year unless it diverts funds to shore up its ailing economy. Oil sales accounted for around 94 per cent of the government's income of 21bn dinars during the past financial year, figures released by the ministry of finance showed yesterday.
Its total income was nearly 66 per cent higher than projected in the financial year ending on March 31. Kuwait, like other oil producing Gulf states, has been exposed to dramatic swings in the price of oil over the past year. It based its revenue for the year on an oil forecast of $50 per barrel. From a record peak of $147 in July last year, the oil price dipped to below $35 in December, the lowest since the start of the financial crisis, before rallying to $50 at the end of March. The country's expenditure was 18.26bn dinars, 4 per cent lower than forecast, figures from the ministry showed.
Under a budget approved by Kuwait's parliament last month for the current financial year ending next March - based on an oil price of $35 a barrel - the government has projected a deficit of 4.8bn dinars because of lower oil prices. The government expects to cut spending by 36 per cent to 12.1bn dinars. "If the government holds on to the new spending limits, then 2010 would also probably mark another year of surplus with oil prices currently range bound at $70 per barrel," said Mandagolathur Raghu, the senior vice president of research at the Kuwait Financial Centre.
However, Mr Raghu said, "given the pressure on the government to alleviate unemployment in the private sector, as well as to bail out distressed companies, spending may mark a surprising upturn". Revenue from oil in the financial year was 19.7bn dinars, 69 per cent higher than budgeted for by the government. Non-oil revenue for the year totalled 1.3bn dinars, 26 per cent higher than budgeted. About 10 per cent of revenue will be saved in the Reserve Fund for Future Generations, Kuwait's investment fund.
Kuwait's central bank said yesterday it would issue 100 million dinars in one-year treasury bonds with a coupon of 1.5 per cent. The bonds were almost three-and-a-half times oversubscribed, as investors submitted 340.5m dinars in bids for the bonds, the central bank said. Its most recent auction last Wednesday involved a similar issue of more than 100m dinars in treasury bonds with a coupon of 1.5 per cent.
Crude oil for September delivery fell yesterday by $1.86, or 2.8 per cent, to $65.65 a barrel in after-hours electronic trading on the New York Mercantile Exchange. * with agencies tarnold@thenational.ae
