KUWAIT CITY, 11 May 2005 — OPEC member Kuwait is set to almost double its budget surplus in 2005-6, reaping up to $18.5 billion on the back of strong oil prices and high output, an independent economic report forecast yesterday.
National Bank of Kuwait (NBK), the leading bank in the emirate, said it expected the price of Kuwait export crude to range between $40.9 and $46.5 a barrel for the year starting April 1. The emirate is forecast to post record revenues of between $35.6 and $41 billion over the year, giving a surplus of between $13 billion and $18.5 billion, NBK said.
NBK forecast oil revenues at between $33.2 billion and $38.7 billion. Kuwait is currently pumping at full capacity of 2.7 million barrels per day (bpd), almost 500,000 bpd above its OPEC production quota.
Preliminary figures for Kuwait’s financial results in 2004-5 which ended on March 31 show revenues at around $30 billion and the budget surplus at about $10 billion.
The 2005-6 budget forecasts a deficit of $7.9 billion, with projected revenues of $15.6 billion and spending of $23.5 billion. Budget figures are based on a conservative oil price projection of $21 a barrel, compared with current market prices well above $50. It would be the seventh year in a row that Kuwait is able to boast a surplus due to high oil prices following almost two decades of deficits because of weak prices and costs associated with the 1990 Iraqi occupation.
The emirate posted surpluses totaling more than $30 billion over the past six fiscal years. Returns on foreign assets, estimated at more than $90 billion, are not included in the budget.
Between 1990 and 1999, the emirate incurred accumulated deficits of 21.1 billion dinars ($70 billion) and managed a surplus of $210 million only in the 1996-7 fiscal year. However, more than 61 percent of the total deficits came in the first two years of the last decade to finance the 1991 Gulf War.
