Kuwait budget spending up 8%, below full-year plan
Spending in the first 10 months of this fiscal year is still far below its initial plan
Kuwait’s government spending rose 8 percent in the first 10 months of this fiscal year compared with the same period the previous year but is still far below its initial plan, preliminary finance ministry figures showed.
The major oil exporter’s public expenditure reached 10.58 billion dinars ($37.6 billion) in the April-January period, up from 9.78 billion dinars a year ago but little over half of its spending plan of 21 billion dinars for the fiscal year ending in March.
The OPEC member has been undershooting its budget plans as political wrangling delays budget approvals in parliament and investment spending.
That together with high oil prices has helped the Gulf Arab state build large fiscal buffers. But economists say it needs to control public wage growth and other non-investment spending in order to keep posting budget surpluses into the next decade.
The International Monetary Fund warned in December that it will be important for Kuwait to restrain the rising public sector wage bill and subsidies because any sustained period of low oil prices could reduce its budget surpluses.
In October, the prime minister described the country’s welfare system as unsustainable. Kuwait, which relies on oil for around 94 percent of its income, provides a generous cradle-to-grave welfare system for its citizens.
Senior government officials have talked more frequently about the risk to Kuwait’s budget surplus. But it is unclear whether the cabinet will be able to push through unpopular economic reforms such as reducing subsidies or halting wage growth.
State revenue was 26.63 billion dinars in the April-January period, slightly below 27.00 billion in the same period last year but well above a conservative full-year plan of 18.10 billion dinars. Oil income stood at 24.76 billion dinars.
That put the fiscal surplus for the 10 months at 16.05 billion dinars, or 31.3 percent of the country's 2012 gross domestic product, according to a Reuters calculation based on the latest official data. Kuwait penciled in a deficit of 2.91 billion dinars in its 2013/14 plan.
A Reuters poll in January showed analysts forecast a fiscal surplus of 23.5 percent of GDP for 2013/14 and 20.7 percent for the next fiscal year.
Kuwait pledged $4 billion in aid to Egypt after the overthrow of Islamist Egyptian President Mohammad Mursi in July, and quickly began disbursing that aid. It was not clear whether the latest data reflected that cost.