KUWAIT'S BUDGET: THE NEW MATH

UNCLAS KUWAIT 002991

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN EPET PGOV KU
SUBJECT: KUWAIT'S BUDGET: THE NEW MATH



1. Minister of Finance Bader Mishari Al-Humaidhi reported to
local papers on July 3 that Kuwait posted a KD3.2 billion
($11 billion) surplus for the 2004/2005 (1 April - 31 March)
fiscal year. Income for Kuwait was almost three times higher
than the original budget projections made last year.
Approximately 91 per cent of the GOK's income is from oil
revenues. The 2004/2005 Kuwait budget calculated income
based on a $15/barrel price estimate. Actual income from oil
sales for the year was $27.8 billion on an average actual
price of $35.50 per barrel. This is the sixth consecutive
year that Kuwait has posted a budget surplus.


2. On June 29, Kuwait's National Assembly passed the state
budget for Kuwait's fiscal year 2005/2006. The new budget
projects a 2.6 billion KD deficit ($10.5 billion),with an
expected income of KD4.6 billion and expenses of KD7.2
billion. However, Kuwait is estimating its oil revenue to be
only KD3.9 billion based on a very conservative $21/barrel
sale price for the fiscal year. With Kuwait export crude
currently selling at an all-time high of $49/barrel and
production reaching 2.7 million bpd, local economic reports
have forecast a surplus in revenue of over KD5 billion by the
end of the year. Should that prove correct, Kuwait will have
seven consecutive years of budget surplus.

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