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Kuwait’s budget surplus falls as spending rises 18%

By Agencies - Feb 10,2014 - Last updated at Feb 10,2014

KUWAIT CITY — Kuwait’s provisional budget surplus shrunk in the first nine months of this fiscal year as spending rose 18 per cent and income was unchanged, according to official figures released Sunday.

The provisional budget surplus dropped 11 per cent to 14.34 billion dinars ($50.7 billion,37 billion euros) at the end of December compared to 16.1 billion dinars in the same period of the previous year, according to figures posted on the ministry of finance website.

Spending in the nine-month period was 9.64 billion dinars compared to just 8.16 billion dinars in the same period of the previous fiscal year.

Kuwait’s fiscal year runs from April 1 to March 31.

Revenues in the first three quarters of the 2013/2014 fiscal year came in at 24 billion dinars, slightly less than the 24.26 billion posted in the same period of the previous year.

Oil income, which makes up over 92 per cent of total revenues, dropped slightly from 22.84 billion dinars in the 2012-2013 fiscal year to 22.2 billion dinars in the current year.

Spending on development projects has been hampered by political disputes in recent years, but picked up slightly in recent months with the award of a number of mega projects worth several billion dollars.

Kuwait is projecting spending in the current fiscal year, which ends on March 31, at 21 billion dinars, with revenues at 18.1 billion dinars, leaving a deficit of 2.9 billion dinars.

Kuwait has projected a deficit in each of the past 14 fiscal years but ended with large surpluses because it assumes a conservative price for oil.

In the previous fiscal year, the emirate posted an actual surplus of 12.7 billion dinars, following a record 13.2 billion-dinar surplus in 2011-2012.

Thanks to higher than expected income driven by firm oil prices, Kuwait decided for the second year in a row to transfer 25 per cent of revenues into the emirate’s sovereign wealth fund, the assets of which are currently estimated at over $400 billion.

Kuwait has a native population of 1.2 million, in addition to 2.7 million foreigners, and pumps about 3 million barrels of oil per day.

Separately, a parliamentary investigation into a Kuwait Airways plan to buy and lease aircraft from Airbus will not affect the deal, the state carrier’s chairwoman told a local newspaper in comments published on Sunday.

Kuwait’s parliament voted on Wednesday to investigate all contracts signed by state-owned Kuwait Airways, which is attempting its biggest overhaul since the 1990 Iraqi invasion.

Such parliamentary inquiries are common in Kuwait, where lawmakers in the Gulf state’s National Assembly often question large government projects and have delayed or scuppered them in the past.

Al Anba newspaper quoted Kuwait Airways Chairwoman Rasha Al Roumi as saying the deal would be completed without being delayed.

In December, the loss-making airline signed a provisional agreement with Airbus to buy 25 new aircraft in a deal worth $4.4 billion at list prices.

The order would include the purchase of 10 A350-900 and 15 medium-haul A320neo jets. The airline also aims to lease 12 aircraft from Airbus pending delivery of the new planes.

The two companies are now going over technical and legal aspects of the deal, Al Anba said. A final contract will only be signed when an internal Kuwait Airways commission gives the green light, it added.

A Kuwait Airways spokesman was not immediately available for comment on the report.

Politics and bureaucracy have long complicated Kuwait’s plans to modernise its infrastructure and compete as a Gulf financial hub.

The carrier has one of the oldest fleets in the Middle East and wants to take out of service 11 jets from its fleet of 17, in which the planes’ average age is 18 years.

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