Kuwait oil budget spills into $42.9bn surplus
Kuwait posted a record budget surplus of KD13.2 billion ($47 billion) in the fiscal year that ended March 31 as oil prices and output rose.
Government revenue was KD30.2 billion, including oil revenue of KD28.6 billion, according to data posted on the Finance Ministry's website yesterday. Spending was KD17 billion, 12.5 per cent below budget, the data showed. Ten per cent of revenue is saved in the Reserve Fund for Future Generations. "It's a record surplus because oil production was high and average oil prices were over $100 in the last fiscal year,- Jassim al-Saadoun, head of Kuwait-based Al-Shall Economic Consultants, said by phone.
Government investments haven't kept pace with the growth in salaries. Progress on a four-year development plan to modernise infrastructure and diversify the economy, in which private investors were due to contribute almost half of the $111 billion tab, has been set back by recurring political tensions.
Al-Saadoun said that increases in spending on salaries and wages, which accounted for between KD9.0 billion and KD10 billion in fiscal 2011-2012, are making it hard for the country's economy to be competitive.
"Financially, Kuwait is in surplus but economically, the situation is in a deficit,- he said. "We are selling an asset and gaining money from it, but there is still no economic activity.-
The IMF said in May that Kuwait will exhaust all oil revenue by 2017 if the government's current spending policy continues. Former central bank governor Sheikh Salem AbdulAziz Al-Sabah resigned in February, criticising the government's increase of public expenditures "to unprecedented levels.