KUWAIT - Kuwait will use an expected budget surplus for fiscal year ending March 31, 2023 to replenish its General Reserve Fund, its finance minister said, after running down the GRF during the COVID-19 pandemic when oil prices dropped.

The oil-producing Gulf state's parliament on Tuesday approved the 2022/2023 government budget after a delay caused by a political standoff that led to a dissolution of the previous assembly and an early election held in September.

The budget set spending at 23.5 billion dinars ($75.90 billion) and revenues at 23.4 billion dinars, according to a parliamentary committee report seen by Reuters. It is based on an oil price of $80 per barrel.

"(Oil) prices today and for awhile are above this price, and this will result in surpluses in the next final account (of the budget)," Finance Minister Abdul Wahab al-Rasheed said, without specifying how big the surplus would be.

"And through these surpluses we seek to restore the General Reserve," he said after Tuesday's parliament meeting.

The GRF, the sovereign fund used to cover state deficits, was squeezed by the pandemic and a fall in oil prices. Due to legislative gridlock over a debt law allowing Kuwait to tap international markets, the GRF resorted to asset swaps with Kuwait's Future Generations Fund to raise money.

The Future Generations Fund (FGF) is a nest egg for when the OPEC member state's oil runs out. A law in 2020 halted a mandatory annual transfer of 10% of state revenue to the FGF.

Independent think tank AlShall Consulting estimated that Kuwait's budget surplus would be 2.2 billion dinars at the end of September, and it anticipates total revenues to be 31.8 billion dinars by the end of the fiscal year "if the level of production and prices remained unchanged".

An earlier draft of the state budget for the fiscal year starting April 2022 put spending at 23.065 billion dinars compared with 23.048 billion in the 2021/2022 budget.

The finance minister had said in August that the government had been working based on the 2021/2022 budget in the absence of parliamentary approval for the next one.

The latest budget report showed additional spending included 300 million dinars for cash compensation to government employees for outstanding annual leave, as well as 157 million dinars for new categories of pandemic frontline workers.

($1 = 0.3096 Kuwaiti dinars)

(Reporting by Ahmed Hagagy; editing by Mark Heinrich)