Deficit to fall as non oil revenue and oil prices rise

Finance Minister Nayef Al-Hajraf

A report from the Ministry of Finance shows that Kuwait’s budget deficit narrowed to KD3.3 billion in the fiscal year that ended on 31 March, from higher than expected oil prices and a hike in non-oil revenues.

Announcing the closing accounts for the fiscal year 2018-2019 that ended on 31 March, 2019, the Finance Minister stated that revenues reached KD20.558 billion while expenditure stood at KD21.849 billion. Accordingly, the budget recorded a deficit of KD3.346 billion, after making the 10 percent of revenue transfer to the Future Generations Fund (FGF) as mandated by law.

Speaking on the closing accounts, the Minister of Finance Dr. Nayef Al Hajraf said, “For the second year in a row, the State of Kuwait’s non-oil revenues continued to grow by 24 percent year-on-year, capital expenditure remains a healthy proportion of the total expenses at 14 percent, and we estimate capex will reach 17 percent during the current fiscal year to stimulate economic growth and to serve Kuwait’s 2035 vision, New Kuwait”.

Highlights from the closing accounts include:

■ Oil revenue up 29 percent from last financial year, to KD18.4 billion.

■ Non-oil revenue up 24 percent from a year earlier, at KD2.13 billion.

■ Total Revenue up 28.5 percent from last year, at KD20.558 billion.

■ Average price for crude oil export from Kuwait during the last year was $68.62 per barrel.

■ Wages and subsidies accounted for 75 percent of all expenses, at KD16.334 billion.

■ Capital Expenditures at KD3.032 billion, constituted 14 percent of all expenditure.

■ Total Expenditure was up 13.5 percent from a year earlier, at KD 21.8 billion.

■ The recorded fiscal deficit for the year pre-FGF transfer was KD1.29 billion. The recorded fiscal deficit post-FGF transfer is KD 3.346 billion, down 31 percent from last year. This is the fifth consecutive year of deficits for the State of Kuwait.

■ By law, the Closing Accounts do not include revenue from the FGF, which is managed by the Kuwait Investment Authority. All investment revenue from FGF activities are reinvested by the Fund.

■ The actual deficit for the year ending on March 31, 2019 will be covered by withdrawals from the General Reserve Fund (GRF, the State’s treasury) in the absence of a law governing the issuance of sovereign bonds. The last active debt law expired in October 2017.