Kuwait budget surplus hits record $46bn
Kuwait, September 5, 2012
Kuwait’s closing public finances data for fiscal year 2011-12 revealed a record surplus of KD13.2 billion ($46.7 billion) before transfer to the reserve fund, a report said.
This was mostly due to higher oil prices, which averaged $110 per barrel during the fiscal year, added the latest Kuwait Economic Brief published by the National Bank of Kuwait (NBK).
The surplus was also higher than expected because of under-spending in particular in the projects area, the report pointed out.
Total spending reached KD17 billion, rising by a small 4.8 per cent compared to financial year 2010-11 (FY 10/11). Although this is somewhat skewed by the impact of the one-time Amiri grant in FY10/11 (without which total spending would be up 13 per cent y/y), actual spending still disappointed as it came in at 88 per cent of budgeted — well below the five-year average of 94 per cent.
Current spending went up 5.8 per cent y/y, standing at KD 15.2 billion. Most of the increase came from KD 680 million in additional spending on wages and salaries. Current spending reached 92 per cent of the amount initially budgeted, also below its historic average of 97 per cent.
Capital spending was down 2.3 per cent y/y, reaching KD 1.8 billion. The biggest contributor to this decrease was the Ministry of Electricity and Water, which saw spending drop by KD 174 million, or 17 per cent y/y.
Capital spending also closed at 64 per cent of budgeted spending, well below the historic average of 75 per cent. This was indeed disappointing as FY 11/12 marked the second year of the 4-year development plan, where spending was supposed to pick up in pace.
Nevertheless, this was somewhat expected as a majority of projects in the development plan are yet to take off, the brief said.
Total revenues were KD30.2 billion, up 41 per cent compared to FY10/11. High oil prices have buoyed revenues for FY 2011/12 as the average oil price for the period was $110 per barrel, up 34 per cent y/y. Oil receipts totaled KD28.6 billion (+43 per cent y/y).
Non-oil revenues accounted for almost 6 per cent of total revenues, similar to the historic average. They were up KD112 million, or 7 per cent, y/y. The bulk of the increase came from miscellaneous revenues and fee, which went up KD 85 million, likely thanks to payments made by the United Nations Compensation Committee (UNCC) — which processes compensation claims related to the 1990 war.
Revenues from property fees were up 30 per cent, to reach KD 14.5 million, reflecting increased activity in the real estate sector.
FY 11/12 saw a historic surplus, the brief said. It reached its highest level as well as the highest rate relative to GDP in recent history (amounting to 30 per cent of 2011 nominal GDP).
Though this provides a comfortable cushion for the government, it is not all good news, the report said.
According to the NBK brief, the rate of actual spending to budget, as well as capital spending to budget, were both the second lowest in 10 years, highlighting the lackluster pace of government spending, at a time when the economy and the private sector would greatly benefit from higher spending on projects and infrastructure. – TradeArabia News Service