KUWAIT CITY, 13 March 2005 — Kuwait’s trade surplus rose a massive 66 percent in 2004 from a year earlier due to soaring oil revenues, the Central Bank of Kuwait (CBK) said yesterday.

CBK said surplus on Dec. 31, 2004 reached $16.4 billion, compared to $9.9 billion a year earlier. The emirate’s total exports reached $28.4 billion in 2004, of which $26.3 billion, or 92.6 percent, were oil exports. Imports in the same period were worth $12 billion.

Kuwait’s trade balance hit a surplus of $12.8 billion in 2000 due to a sharp increase in oil prices that year. It dropped to $6.5 billion in 2002. The Gulf Arab state has posted about $21 billion in budget surpluses in the past five years and is well on track to boast a record surplus in the current fiscal year 2004 2005, which ends March 31. Kuwait calculates its oil revenues at a conservative price of $15 a barrel but the actual price of Kuwaiti crude has touched $40 in the past few weeks.

Kuwait also expects a record budget surplus for the fiscal year ending March 2005 that could easily top the previous year’s thanks to high oil prices, the governor of the Central Bank of Kuwait said on Wednesday.

Sheikh Salem Abdulaziz al-Sabah also said in an interview with Reuters the central bank was reviewing applications from two more international banks keen to start operations in the Gulf Arab state and may grant them licenses soon.

“We believe it will be a record high surplus in the budget .... It will be a surplus and it will exceed, we believe, the surplus that has been registered for the last financial year,” he said. Kuwait logged a surplus of about 1.6 billion dinars ($5.44 billion) in fiscal 2003-2004.

Sheikh Salem did not give specific figures for the expected surplus but he said he doubted it would be as much as 4 billion dinars, as forecast by some economists.

He said one complicating factor was that parliament was discussing a law for this year only to transfer more than the mandatory 10 percent of state revenues into a fund for future generations. The rainy day fund was established to support the country when its oil revenues run out.

Sheikh Salem said the central bank, which has so far licensed three foreign banks to open branches here, has rejected several applications from international banks but was seriously considering two applications.

Asked if the central bank wanted to approve the entry of more banks, he replied: “Yes, yes ... At the present we have two applications; there are applications that we have rejected.”

Sheikh Salem could not name the banks. Banks believed to be interested in coming to Kuwait include Citibank and Standard Chartered. HSBC unit HSBC Bank Middle East Ltd., France’s BNP Paribas and the National Bank of Abu Dhabi already have licenses.

Asked when the new licenses will be issued, he said: “Within the coming two to three months ... provided they supply us with the requirements (documents) within this period. We are not delaying, they are.”

The central bank approvals need final ratification from the council of ministers to become effective, but this is normally automatic. Asked if he feared that banking giants like HSBC would have an advantage over the smaller local banks, he said:

“On the retail side I think those banks will be competing but they will not reach a level where they will affect our banks negatively. But on the corporate side, the wholesale, yes they will compete; but this is a good value added to the system here.”

He said there were no current plans to introduce more Islamic banks in Kuwait, where sector giant Kuwait Finance House will soon face competition from new Islamic bank, Boubyan Bank, and from Kuwait Real Estate Bank, a specialized commercial bank converting into an Islamic one.