Kuwait's budget surplus (page 2 of 2)

This represents 104% of the budgeted KD2.97bn oil revenue. This has been achieved on the back of an average of nearly 2.25mn b/d and 2.12mn b/d of oil & gas production for the first and second quarters of the new fiscal year respectively.

Average prices have been well above the budgeted US$15/b as Kuwait export crude is estimated to have averaged US$24.5/b and US$26.7/b for the first two quarters of the fiscal year 2003/04 respectively. With the likely supply constraint in Iraqi output, oil prices are set to remain over well over the budgeted US$15/b.

Assuming the government is able to achieve the other income levels as stated in the budget as well as spend within the boundaries of its allocated amount, another surplus seems inevitable. The projected budget for 2003/04 shows an increase of 5.8% in the non-oil revenues compared to the budget of 2002/03.

The can be attributed principally to five sources, the first of which is the UNCC payments in which the Ministry of Finance has an allotted percentage from companies given compensations. The other sources of increase include income from the Ministry of Finance's fees from legal stamps as well as expected increase in fees and payments on electricity and water.

Adding to these would also be increase in customs payments, in line with the actual results for the previous fiscal year and the increase of the Ministry of Interior's income with the passing of the new traffic law.

A look at the provisional figures from the CBK reveal that Kuwait seems set to also surpass the budgeted other revenue as it has already achieved KD419mn of the budgeted KD584.5mn in the first six months.

Although not a concrete gauge due to adjustments in closing accounts, expenditures for the six month period reached KD1.83bn, only 31.4% of the allocated amount. The budgeted expenditures though point to the governments continued hiring of Kuwaiti nationals as well as sustained transfers & subsidies, despite intentions to channel employment to the private sector as well as plans to reduce subsidies to relieve the government of mounting burdens.

Wages & Salaries remain the second highest burden on the government, second only to transfers & misc. payments. The allocated KD1,649mn for wages & salaries, represents an increase of KD45mn in comparison with the previous years budget. Increases were made to cover salary increases, promotions, social insurance, and allowances in the public sector. It also covers the hiring of new Kuwaiti graduates into public sector positions.

The largest portion of expenditures is taken up by transfers & misc. payments which reached a budgeted amount of KD2,711mn, representing an increase of KD198mn from the previous year. The two ministries which received the greatest increases in transfer payments are the Ministry of Defense and the Ministry of Foreign Affair's public accounts segment.