An oil price of between $101 and $118 per barrel in 2013-14 could generate a budget surplus for Kuwait of up to KD16 billion ($56 billion) next fiscal year, following a surplus of KD14 billion ($50.4 billion) in 2012-13, a report said.
Crude oil prices continued to rally in the first half of February on increased optimism over the global economic outlook, but these gains were subsequently reversed, helped by a stronger US dollar, added the latest Kuwait Economic Brief released by the National Bank of Kuwait (NBK).
Forecasts for oil demand growth in 2013 have edged higher as a result of better-than-expected 2012 data. Still, Opec may need to cut production further to prevent prices from falling, the report said.
With just one month remaining in the current fiscal year, the price of Kuwait Export Crude (KEC) is expected to end up at $107 per barrel. If the spending comes in 10-15 per cent below the government’s forecast, this year’s budget surplus could end up between KD13 billion and KD14.4 billion before allocations to the Reserve Fund for Future Generations (RFFG).
Budgeted spending for the next fiscal year is set at KD21 billion, the report said.
Assuming that spending comes in 5-10 per cent below budget, NBK projects a surplus of between KD 9.6 billion and KD15.9 billion before allocations to the RFFG. This would equate to 20 per cent-33 per cent of forecast 2013 GDP, and would represent Kuwait’s 15th successive budget surplus.