KUWAIT CITY, 4 April 2004 — Kuwait appears well set for posting the largest fiscal revenue in more than 25 years on the back of high oil prices and a rise in production, a specialist report said yesterday. The emirate is expected to finish the fiscal year that ended on March 31 with total revenues of 6.90 billion dinars ($23 billion), the largest since 1979, the independent Al-Shall Economic Consultants said.
Oil revenues are estimated at 6.17 billion dinars ($20.6 billion) up from budget projections of 2.97 billion dinars ($9.9 billion). Non-oil income is estimated at 730 million dinars ($2.4 billion). The average price of Kuwaiti oil during fiscal year was $26.9 a barrel, compared with the $15 figure used in calculating the budget, the report said.
According to figures posted on the Finance Ministry’s website, total revenues collected until the end of February were 6.3 billion dinars ($21 billion), up from budget projections of $11.85 billion for the whole year.
The same figures showed public expenditures at 3.96 billion dinars ($13.2 billion) with one month still remaining in the year. That compared with budget estimates of 5.94 billion dinars ($19.8 billion) for the whole year. But Al-Shall expects actual spending to climb to 5.4 billion dinars ($18 billion) because of the financial adjustments usually made at the end of every fiscal year. According to law, 10 percent of total revenues is set aside and placed in the Kuwait Fund for Future Generations (KFFG), managed by the Kuwait Investment Authority (KIA), regardless of whether there is a deficit or surplus.
Economic reports have indicated that the emirate, which has a production capacity of 2.5 million barrels per day (bpd), has been producing above its OPEC quota of just under two million bpd. National Bank of Kuwait (NBK), the largest bank in the emirate, said in its latest report that most of the rise in oil revenues came from increased production.
This will be the fifth 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 of costs associated with the 1990-91 Gulf War. The emirate projected deficits in each of those years, but finished all of them with huge surpluses because of high oil prices and increased production. The emirate posted a surplus of $4.3 billion in 2002 2003, reporting revenues at $20.7 billion and expenditures at $16.4 billion. It has projected a deficit of $9.56 billion for the current fiscal year, which started on April 1, based on an assumption of a substantial slide in oil revenues.
The budget projects expenditure at 6.185 billion dinars ($20.62 billion) and revenue at 3.319 billion dinars ($11.06 billion).
Between 1990 and 1999, the emirate incurred accumulated deficits of 21.1 billion dinars ($70 billion) and managed a surplus of 63.2 million dinars ($210.1 million) only in the 1996 97 fiscal year. However, more than 61 percent of the total deficits came in the first two years of the last decade to finance the US-led Gulf War to liberate Kuwait from seven months of Iraqi occupation.