KUWAIT CITY, Jan 24, 2011 (AFP) - The cabinet in oil-rich Kuwait on Monday approved the 2011/2012 budget, projecting a $16 billion deficit and a 10 percent rise in spending, Finance Minister Mustafa al-Shamali said.
The draft budget, which requires the approval of parliament, also projects revenue at 13.45 billion dinars ($48 billion), a substantial 38 percent increase from the current fiscal year estimates, the minister said.
The sharp rise in revenue is attributed to the fact that the price of oil in the draft budget was raised to $60 a barrel from $43 in this fiscal year ending March 31.
Spending is projected at 17.93 billion dinars ($64 billion), up 10 percent on the 2010/2011 estimates, Shamali was cited by the official KUNA news agency as saying following an extraordinary meeting of the cabinet.
OPEC's fifth largest producer has projected a shortfall in each of the past 11 fiscal years but ended up with healthy surpluses, mainly from underestimating oil income.
The emirate ended the first nine months of the current fiscal year with a preliminary budget surplus of $25 billion, compared with a projected shortfall of $23.5 billion for the whole year.
This will be Kuwait's 12th year of budget surplus after having accumulated more than $140 billion of budget surpluses in the past 11 years.
Under Kuwaiti law, 10 percent of revenues are deducted every year in favour of the emirate's sovereign wealth fund, the assets of which are estimated at around $300 billion.
Returns on the fund are not included in the budget.
Kuwait says that it holds 10 percent of global crude reserves and is pumping about 2.3 million barrels per day.
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Copyright AFP 2011.
