Kuwait could record a surplus of up to KD7.2bn ($24.7bn) for the financial year to April 2011 on the back of higher-than-budgeted oil prices, according to the local National Bank of Kuwait (NBK).

The Finance Ministry projected a deficit of KD6.4bn in 2010-2011 in a preliminary budget passed by the country’s National Assembly, or parliament, in late June.

However, the budget assumes an oil price of $43 a barrel for the country’s benchmark Kuwait Export Crude contract, up from the $35 a barrel it predicted for 2009-2010, NBK analysts said in a 15 July report. NBK expects the average price of oil to sit within a $65.4-85.6 a barrel range in 2010-2011.

An average at the lower end of this range would mean a surplus of KD100m, while the upper end would mean a thirteenth consecutive multibillion dollar surplus, of KD7.2bn.

The ministry expects higher oil revenues to be offset by a 33.5 per cent increase in spending, which is forecast to hit KD16.2bn, as part of a four-year development plan. Oil revenues hit KD17.9bn in 2009-2010 on an average oil price of $68.6 a barrel.

The NBK forecasts assume that the government will hit its KD16.2bn expenditure target, something it has consistently failed to do over the past decade. If the government does not spend to budgeted levels the surplus could be even higher.

Oil exports are projected to make up 89 per cent of government revenues during the year, meaning the size of the surplus is particularly dependent on the oil price.