Kuwait's earning power

Official figures show that in the last five months of its fiscal year Kuwait earned KD6.64 billion (US$23.1 billion), which is about 82 percent of projected annual income, as oil prices rose.

The OPEC member's oil revenues in the five months to August came in at KD6.24 billion (US$21.7 billion), or 90 percent of the projected oil income for the 2009/2010 fiscal year that began on April 1, according to figures posted on the finance ministry's website.

Kuwait has projected revenues of KD8.07 billion (US$28.1 billion), calculating oil income at a conservative price of just 35 dollars a barrel.

Oil has gradually risen from lows of around US$30 per barrel at the end of last year and into this year. On Thursday, it was holding above US$70 a barrel in trade.

Although actual earnings are much higher than budget projections, they are far below the income of the previous fiscal year, when oil rallied to an all-time high of US$147 per barrel in July.

The global economic downturn has hit demand for hydrocarbons worldwide, prompting worries that the world's top oil exporters in the Gulf would witness an economic slowdown after six years of an oil-fuelled boom.

In the first five months of the 2008/2009 year, Kuwait posted KD12.84 billion (US$44.7 billion) in revenues, almost twice as much as this year when the price of oil, which contributes 94 percent of revenues, peaked.

OPEC's fourth-largest producer finished the last fiscal year with a surplus of KD.75 billion (US$9.6 billion) despite making a one-off payment of KD5.5 billion (US$19 billion) to the state pension fund, Arabian Business reported.

Kuwait's actual spending in the five months up until the end of August was KD2.4bn (US$8.3 billion), which was way below the budget spending estimates of KD12.1bn (US$42.1 billion), the ministry said.

The oil-rich Gulf emirate has projected a deficit of KD4 billion (US$14 billion) in the current fiscal year, yet local banks are forecasting a surplus of up to KD6 billion (US$21 billion).

This would be Kuwait's 11th straight year of budget surplus. In the past 10 years, it has accumulated around US$123 billion of budget surplus based on available official data.

The emirate has been investing its savings abroad through Kuwait Investment Authority, the sovereign wealth fund whose assets are estimated at around US$230 billion.

Kuwait has said that it sits on 10 percent of global crude reserves and pumps around 2.2 million barrels per day.

 

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