Kuwait's budget surplus for the first six months of FY 2012/13 reached KD12.6 billion ($44.7 billion) before allocations to the Reserve Fund for Future Generations (RFFG), said a NBK report.
This surplus is equivalent to 26 per cent of the country's annual 2012 GDP, and is KD3.8 billion higher than the comparable period in the previous fiscal year, it said.
The bank said the budget surplus for the whole of FY 2012/13 will be KD12.0 billion, as spending typically accelerates in the second half of the year.
Total revenues for the first half reached KD16.0 billion, of which KD15.4 billion came from oil revenues. Oil receipts were up 16 per cent year-on-year. This is stronger than expected given the 2 per cent drop in Kuwait Export Crude prices and the 11 per cent increase in oil production over the same period, it said.
Non-oil revenues, on the other hand, were down slightly on lower miscellaneous revenues and fees, likely related to UN compensation payments.
Total government spending picked-up in the second fiscal quarter, following a particularly sluggish 1Q. 2Q spending stood at KD2.5 billion, compared to just KD0.9 billion in 1Q. Despite the apparent surge, spending remains low for this time of the year, at just 16 per cent of planned full year expenditures. This is possibly due to the delayed approval of the budget, the bank said.
Moreover, although the full data set is not yet available, the rise in 2Q spending appears to be linked to intergovernmental transfers, which are unlikely to have had a big impact on the economy.
Capital spending has recovered somewhat given its weak start, reaching KD0.3 billion in 2Q versus KD0.1 billion in 1Q. The rate of spending has picked-up to 13 per cent of the full-year budget, but this still lags the five-year historic average of 20 per cent. Year-on-year, capital spending was down 9 per cent, the banks aid.
Some acceleration is expected in the second half of the year as the government speeds up execution of infrastructure projects, it added.