Kuwaits budget deficit seen at 8% of GDP in FY19/20: NBK

Mubasher: The Kuwaiti government recorded a general budget deficit of KWD 1 billion during the first nine months of fiscal year (FY) 2019/2020, representing 3% of the estimated 2019 gross domestic product (GDP), against a surplus of KWD 3.6 billion in the same period a year earlier.

The total deficit reached KWD 2.3 billion after transfers to the Future Generations Fund (FGF), the National Bank of Kuwait (NBK) said in a report on Monday.

The rise in deficit is attributed to lower oil prices, which drove total revenues down by 19% on an annual basis.

Moreover, the Gulf country's expenditures rose by 13% while current spending went up by 18%. The NBK report ascribed such robust increase to an unusual weakness reported over the corresponding period last year.

NBK is predicting the deficit to rise and close this year at 8% of GDP, before FGF transfers.

Similarly, fiscal pressures are seen to continue throughout the coming year, with the government’s draft budget deficit reaching KWD 7.7 billion for FY20/21, or 19% of the estimated GDP, and KWD 9.2 billion after the FGF transfers.

In the meantime, revenues are forecast to slide by 6.5% to stand at KWD 14.8 billion, on lower oil revenues.

Furthermore, the Kuwaiti bank added that the deficit may register a level below expectations at 9% of GDP, assuming oil prices at $60 per barrel (pb).