Kuwait posted a budget surplus of KD5bn ($17.5bn) during the first six months of its 2009-2010 financial year on the back of higher than expected oil prices and below-budget spending.

Revenues totalled KD8.2bn during the six months between March and September 2009, the country’s Ministry of Finance said in its summary of the first half of the financial year. The government spent KD3.2bn during the same period, leaving a surplus of KD5bn.

The country raised KD7.7bn from oil, down 44.6 per cent from the KD13.9bn it made in the same period of 2008, while non-oil revenues were KD471m, down 26 per cent from KD623m in 2008.

The government forecast a budget deficit of KD4bn plus for 2009-2010 on the basis of an average oil price of $35 a barrel and KD12bn in spending.

Oil prices have rebounded to highs of $78 a barrel since the $34 a barrel low recorded in February, and the Kuwaiti government has only managed 27 per cent of its planned spending for the year during the first six months of the year.

The country’s full year surplus could hit KD6.4bn, or $22.5bn, if oil prices remain high and spending low, according to analysts at the local National Bank of Kuwait.

Sources close to the government do not see the soaring surplus as a positive signal however, because the budget is being buoyed by the increasingly recurrent problem of below-budget expenditure as the country’s ruling cabinet struggles to pass planned spending programmes through parliament.