Oil-rich Kuwait, which in fiscal 2000-2001 boasted the biggest budget surplus in two decades, appears to be heading for a deficit in the current fiscal year, a think tank said Saturday, December 1.
"With the decline in oil prices and production continuing, the budget seems to be headed for a deficit after two years of surplus," the independent Al-Shall Economic Consultants said in a weekly report.
OPEC's expected production cut of about 6.47 percent in January -- assuming it is backed by substantial cuts by non-OPEC producers -- and reduced world oil prices to about $20 a barrel during fiscal 2001-2002, will result in oil revenues reaching about 3.878 billion dinars ($12.7 billion), Al-Shall said. The think tank predicted that oil and non-oil revenues combined would reach 5.028 billion dinars ($16.5 billion), 247 million dinars ($815 million) less than estimated expenditure.
Kuwait's 2001-2002 budget projects a deficit of $5.95 billion. Expenditure is forecast at $17.18 billion and revenues at $12.48 billion, with oil income projected at $10.63 billion, or 85 percent of the total.
By law, 10 percent of revenues, or $1.25 billion in this case, are deducted for the Kuwait Fund for Future Generations, a 60-billion-dollar investment managed by Kuwait Investment Authority. Oil revenues in the budget were calculated on the basis of a conservative price of $15 a barrel and daily production of about two million barrels. The budget for the 2001-2002 fiscal year started on April 1 and ends March 31, 2002. — (AFP, Kuwait City)
© Agence France Presse 2001
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