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Kuwait set to register huge budget surplus

Opec member Kuwait was forecast to post its largest revenues and budget surplus this current fiscal year on the back of high oil prices and production, a local economic report said.

Revenues in the 2011-2012 fiscal year, which ends on March 31, are expected to top $100 billion for the first time, ending between $10 billion and $104 billion, the National Bank of Kuwait (NBK) said.

Oil income is forecast to contribute around 95 per cent of the revenues, according to NBK, which said the average price for Kuwaiti oil will be about $109 a barrel, way above the budget price of $60.

Kuwait, which ended the past 12 fiscal years in surplus amassing over $200 billion, will also post a record windfall topping $41 billion at the end of 2011-2012 year, NBK said.

Its previous record revenues reached last fiscal year $79 billion, while its largest budget surplus was $33.5 billion in the 2007-2008 fiscal year.

The emirate has been pumping around three million barrels per day (bpd), even when its Opec output quota was just 2.2 million bpd.

Based on official figures, the country posted revenues of $77 billion in the first three quarters of the fiscal year, up a massive 41.7 per cent a year ago, with almost all the increase coming from oil.

As the income rose sharply, spending also increased at a fast pace, tripling in the past six years to around $70 billion.

The Governor of the central bank Shaikh Salem Abdulaziz Al Sabah quit earlier this month in protest at the rapid growth in public expenditures.

The sharp increase in spending has caused alarm that the emirate, which has a native population of 1.17 million, could face serious consequences if oil prices crash as they did in 2008.


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