Kuwait five months budget surplus widens to $29bn

Kuwait's budget surplus rose to 8.1 billion dinars ($29.2 billion) in the first five months of its 2011-12 fiscal year, much larger than a year ago on higher than expected oil revenue and lower spending, finance ministry data showed on Thursday.

The surplus accounted for 22 per cent of the Opec member's gross domestic product, according to Reuters calculations. It stood at 4.6bn dinars in the same period a year ago and at 6.8bn in April-July.

Revenue of the world's sixth-largest oil exporter was 11.9bn dinars in April-August, while spending came at 3.7bn, below a projected 8.1bn, the data showed.

Oil revenue reached 11.3bn dinars in April-August, accounting for 95 per cent of the total. The 2011-12 budget is based on an oil price of $60 per barrel.

Brent crude prices have been floating between $98 and $127 per barrel since the fiscal year started in April.

On Thursday, prices rose around $1 per barrel with US futures touching $80.6 per barrel on expectations Europe would support its banks and as data suggested global growth may be slightly stronger than anticipated.

Since 2004, Kuwait's budget spending has tripled to a record 19.4bn dinars planned for the 2011-12 fiscal year, which started in April, with expenditure on wages rising almost as fast.

Revenue was set at 13.4bn dinars in the 2011-12 budget, approved by parliament in June, bringing the projected deficit to 5.99bn, or 16.2 per cent of gross domestic product, according to Reuters calculations.

However, the 2011-12 revenue estimate is very conservative given this year's surge in the price of oil.

In August, Kuwait's ruler said the misuse of budget surplus, including unproductive spending, has led to structural imbalances in the Gulf Arab economy.

The Gulf Arab country of 3.6 million people has no plans to boost budget spending in the next fiscal year, nor does it expect budget cuts in coming months, its finance minister said last month.

A Reuters poll in September forecast Kuwait's economy would grow 4.7 per cent in 2011 and generate a fiscal surplus of 21.4 per cent of GDP in 2011-12, the largest among Gulf Arab oil exporters.