Kuwait’s budget surplus edged up to KD12.9 billion ($44.8 billion) in the fiscal year to last March as government spending fell, largely because of a drop in capital expenditure, finance ministry data showed.
The figures suggest Kuwait is still struggling to spend its oil wealth on economic development because of bureaucratic red tape and political conflict between the cabinet and parliament, which has slowed big infrastructure projects.
The budget surplus, equivalent to around 26 per cent of gross domestic product, was up marginally from KD12.7 billion, or nearly 25 per cent of GDP, in the previous fiscal year.
Kuwait has posted budget surpluses since 1995 but its rising public sector wage bill and large subsidies are expected to slash the surplus to around 12.1 per cent of GDP in 2019, the International Monetary Fund estimated in April.
Total expenditure fell 2.1 per cent from the previous year to KD18.9 billion in the 2013/14 fiscal year, to well below the KD21.0 billion originally planned, the data showed.
Public wages, which account for more than a quarter of current spending, continued to grow, adding 4.3 per cent to KD5.0 billion, although the increase was the slowest in over a decade, National Bank of Kuwait economists Dana al-Fakir and Nemr Kanafani said in a research note.
Meanwhile, spending on projects, maintenance and land purchases dropped 7.3 per cent to KD1.5 billion, which the analysts said was partly due to slow progress in the government’s development plans.
“We expect to see some improvement within the coming years as the new five-year development plan for fiscal years 2015/16-2019/20 gets underway,” NBK said.
Revenue edged down to KD31.8 billion last fiscal year from 32.0 billion dinars in the previous year because of a 2.3 per cent decline in oil income. Crude oil accounts for more than 90 per cent of Kuwait’s government revenues.
Kuwait’s crude oil price averaged $103 per barrel last year, down 3 percent from a year earlier, while oil production remained largely unchanged at an average of 2.9 million barrels per day, NBK said.
Gross domestic product grew a meagre 0.8 per cent in calendar 2013, the IMF has estimated, the worst performance since a 2009-2010 recession and sharply down from a 6.2 per cent expansion in 2012.
Kuwait’s new five-year plan, which has yet to be approved by parliament, envisages spending of over $100 billion in the next five years on infrastructure projects, hospitals, power stations and more than 100,000 residential housing units, state media have reported. Some of the projects are supposed to involve the private sector in public-private partnerships.