Kuwait is set to post a five-billion-dollar surplus, the highest in two decades, at the end of the current fiscal year on the back of high oil prices in the second half of 2000, an economic report said Tuesday.
The monthly report of National Bank of Kuwait (NBK), the largest bank in the emirate, said the surplus would not be affected by the recent drop in the price of crude, which contributes more than 85 percent of Kuwait's total revenues.
The year 2000-2001, which started on last July 1 and ends on March 31, was reduced to nine months to bring the start of the fiscal year to April 1.
The projected budget forecast a deficit of five billion dollars. Oil revenues were calculated at a conservative price of $13 a barrel, but the actual price averaged around $25 a barrel in the July-December period.
The actual surplus would be the largest in 20 years and the second largest ever. Ten percent of revenues will be deducted for the Kuwait Fund for Future Generations (KFFG), a 60-billion-dollar investment managed by the Kuwait Investment Authority (KIA).
Kuwait posted a net surplus of $2.3 billion in the 1999-2000 fiscal year which ended on June 30, 2000, after deducting 10 percent of revenues for the reserve fund.
Al-Qabas newspaper quoted unnamed financial sources as saying Tuesday that Kuwait has projected a deficit of $5.96 billion for the next fiscal year starting April 1.
Expenditures were projected at $17.18 billion and revenues at $12.47 billion. Ten percent of revenues, or $1.25 billion, are deducted for KFFG. Oil prices are calculated at $15 a barrel.
The NBK report said government spending in the first five months of the current fiscal year grew by six percent, or $247 million, but spending on development projects dropped by 18 percent from the previous year.
In December, the price of Kuwaiti crude oil dropped by 25 percent over the previous month to $21 a barrel, but still finished 2000 up 54 percent on 1999 prices.
Returns from the emirate's $60-billion foreign assets, estimated at about three billion dollars, are not included in the surplus.
Kuwait's current OPEC quota is 2.141 million barrels a day, but that is expected to be cut back at the cartel's meeting on Wednesday.—AFP.
©--Agence France Presse.
© 2001 Mena Report (www.menareport.com )