Kuwait budget surplus may hit $52 billion
Kuwait, May 22, 2013
Kuwait is likely to have recorded another massive surplus during the last financial year of up to KD15 billion ($52.8 billion) as the price of Kuwait Export Crude (KEC) averaged $107 per barrel for the fiscal year, a report said.
The spending for the fiscal would have been 10-20 per cent below the government’s forecast, according to the National Bank of Kuwait (NBK) report.
"Last year’s budget surplus could end up between KD12.9 billion and KD15 billion before allocations to the Reserve Fund for Future Generations (RFFG)," the report said.
It said the oil prices could range between $89 and $104 per barrel this year and the preliminary budgeted spending has been set at KD21.2 billion.
"Assuming that spending comes in at a more typical 5-10 per cent below budget, we project a surplus of between KD5.4 billion and KD10.9 billion before allocations to the RFFG. This would equate to 11 per cent -23 per cent of forecast 2013 GDP, and would represent Kuwait’s 15th successive budget surplus," the report said.
Crude oil prices dropped significantly through April, taking them to their 10-month lows. The price of KEC fell below $95 per barrel in mid-April, while Brent crude fell to $96. In both cases, this was the first spell below $100 since last July, and at least $11 below their March averages.
Nevertheless, prices subsequently found support at around $100, suggesting that the period of weakness may have run its course. One view is that strategic buyers have been sitting on the sidelines, waiting to re-enter the market at a lower price. Hopes of easier monetary policy – notably an interest rate cut by the European Central Bank – also helped.
Generally, $100 is the level perceived as acceptable to Opec as it looks to strike a balance between the revenue needs of its members and an affordable price for consumers, the report said.
Given the rise in non-Opec supplies expected this year, Opec’s production moves will be important in supporting the market and its announcements will be followed closely. -TradeArabia News Service