Revenues, more than 90 per cent of which came from oil export sales, were nearly three times higher than the budgeted amount of KD 3,319 million ($11,445 million), while the state underspent by 9 per cent on its budgeted expenditure of KD 6,185 million ($21,328 million).
Al-Humaidi attributed the healthy revenue increases to the high oil price. Kuwait export crude (KEC) averaged $35.50 a barrel in 2004, up by more than $6 a barrel on the previous year, while production averaged 2.4 million barrels a day (b/d), a rise of 6 per cent. The 2004-05 budget was based on an ultra-conservative estimate of $15 a barrel and average production of 2 million b/d.
The announcement came just three days after the National Assembly (parliament) approved the 2005-06 budget in its last session before the summer recess. In keeping with past practice, the budget projects a fiscal deficit of KD 2,626 million ($8,901 million). Total expenditure is forecast to climb by 15 per cent to KD 7,232 million ($24,515 million) while revenues will reach KD 4,606 million ($15,613 million), an increase of 36 per cent.
The large increase in income is largely due to an upward re-evaluation of the forecasted oil price to $21 a barrel based on production of 2 million b/d. The budgeted increase in spending will be fulfilled primarily by current expenditure, which will rise by 23 per cent to KD 1,943 million ($6,586 million), more than a quarter of all state expenditure. Spending on development projects is also budgeted to rise – by 47 per cent to KD 940 million ($3,186 million – MEED 7:1:05).