Kuwait budget surplus surges on high oil income

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Kuwait’s government issued the 2012-2013 budget with record spending projections of 21.2 billion dinars in the absence of a parliament. The new assembly is expected to confirm the budget soon.

National Bank of Kuwait said in a recent report that the country was expected to post a surplus of between $34.8 billion and $45.4 billion at the end of the current fiscal year.

The projections were based on an average oil price of between $104 and $107 a barrel for Kuwaiti crude, said the central bank.

Kuwait has projected a deficit in each of the past 13 fiscal years, but ended in surplus mainly by calculating oil income at a very low price.

During that period, the emirate has accumulated about $250 billion in budget surpluses.

Under Kuwaiti law, 10 percent of revenues are deducted every year in favor of the emirate’s sovereign wealth fund, the assets of which are estimated at about $400 billion.

This fiscal year, Kuwait decided to transfer 25 percent of revenues into the sovereign wealth fund. Returns on the fund are not included in the budget.

With a native population of 1.2 million in addition to 2.6 million foreigners, Kuwait says it holds 10 percent of global crude oil reserves and pumps about 3.0 million barrels of oil per day.

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