Kuwait’s government finances to remain in surplus

Among the GCC states, Kuwait has highest current account surplus in GDP terms and lowest break even oil price for 2017 & 2018 Kuwait is expected to have the highest current account surplus in terms of their GDP with the IMF expecting a surplus of 8.2 per cent and 7.1 per cent of GDP for 2017 and 2018 respectively.

The IMF also estimates Kuwait to have the lowest break even oil price. Kuwait’s budget break even oil price remains the lowest in GCC for 2017 and 2018 at $49.1/bbl and $50.4/bbl, respectively. Credit facilities extended by Kuwaiti banks by the end of the first quarter of 2017 increased by 1.7 per cent to 34.9 billion Kuwaiti dinars. On a y-o-y basis however, credit extended improved by 3.6 per cent year on year.

Non-oil revenues receded by 9 per cent year on year during the same period to KWD 5.6 billion. On the other hand, expenditure went down by 11 per cent year on year for the same period to 16.1 billion Kuwaiti dinars, despite capital expenditure growing by 13 per cent to reach 2.9 billion Kuwaiti dinars. “As a response to low oil prices, Kuwait’s government has responded adequately which include the establishment of a debt management unit at the Ministry of Finance. Fuel subsidy rationalisation was also implemented in 2016, and implementation of additional excise taxes on harmful items, as well as further utility tariff reforms are expected in the second half of 2017,” said Faisal Hassan, Head of Investment Research at Kuwait based Kamco Research.

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