Kuwait cabinet approves budget

Kuwait's Council of Ministers (cabinet) has approved the state's budget for the 2008/09 fiscal year, which starts on 1 April.

As is customary, the budget forecasts a deficit, this year of KD5.1bn ($18.2bn), based on revenues of KD12.7bn against spending of KD17.8bn.

However, the budget is based on a very conservative oil price, thought to be around $36 a barrel. With the oil price averaging more than $80 a barrel, revenues are likely to be far higher, leading to a surplus rather than a deficit.

The state estimates that it will record a surplus of more than KD6bn for the current financial year, despite originally forecasting a deficit.

Moreover, the government has consistently underspent over the past five years, failing to meet its expenditure targets, further boosting the chances of a surplus.

Kuwait has recorded a surplus in each of the last seven fiscal years. Its budget surplus as a proportion of gross domestic product is among the highest in the world.

The budget will now go to the National Assembly (parliament) for approval.