Oil prices double and government spending drops
Kuwait’s budget surplus reached $22bn during the first eight months of 2009 as oil prices were more than double the levels that were forecast and government spending fell below target.
The country’s finance ministry reported on 28 December that Kuwait raised KD11.2bn ($39bn) between March and November 2009. Expenditure totalled KD4.8bn, resulting in a surplus of KD6.3bn.
Although government expenditure may increase in the final four months of the financial year, financial analysts believe that 2009-2010 will be the sixth consecutive multi-billion-dollar surplus for the country.
Kuwait budgeted for oil prices of $35 a barrel in 2009-2010 in response to the global financial crisis, which pushed oil prices to below this value. However, prices rebounded in 2009 following renewed optimism over the global economy and prices increased to more than $78 a barrel in the US on 28 December.
Government expenditure has also fallen short of budgeted levels after a series of projects were either delayed or, in the case of a $15bn refinery at Al-Zour, cancelled because of political pressure from conservative nationalist politicians.
The local National Bank of Kuwait predicts that there will be a lower budget surplus in 2010-2011 as the government builds more projects. This view was boosted following the success of Prime Minister Sheikh Nasser Mohamed al-Ahmed al-Sabah when facing parliamentary questions over alleged financial irregularities and a no-confidence vote earlier in December (MEED 8:12:09).
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