Kuwait forecasts $19.15 billion budget deficit for 2024-25

• The budget anticipates 18.6 billion dinars in total revenues, with 16.23 billion dinars from oil
•  Non-oil revenues are estimated at 2.42 billion dinars, marking a 5.7% rise from current budget ending on March 31, 2024
• The Ministry of Health received a 102.262 million dinars boost for retiree health insurance, including housewives
• The estimated average barrel price for the year is $70, with total projected expenses reaching 24.5 billion dinars

The Ministry of Finance presented the draft general budget for the 2024/2025 fiscal year to the Council of Ministers, which issued referral decrees to the National Assembly for deliberation and approval.

The budget, effective from April 1, 2024, to March 31, 2025, includes capital spending of 2.29 billion dinars. The estimates indicate a financial deficit of 5.89 billion dinars ($19.15 billion), a 13.5% decrease from the current budget cycle ending on March 31, 2024.

On this occasion, the Minister of Finance Dr Anwar Al-Mudhaf said, “We look forward to work and cooperate with the National Assembly to approve the new general budget draft law.”

Al-Mudhaf extended thanks to the Ministry of Finance staff for their efforts in preparing the state’s general budget.

The most prominent features of the budget

In a statement, the Ministry of Finance revealed that the total estimated revenues in the budget stand at 18.6 billion dinars, with oil revenues projected at 16.23 billion dinars. This marks a decrease of 5.4% from the current budget cycle, ending on March 31, 2024.

Non-oil revenues were projected at 2.42 billion dinars, which reflects a rise of 5.7% over the current budget, which ends on March 31, 2024.

The estimated average price of a barrel stands at $70 for the year, with total projected expenses amounting to 24.5 billion dinars. Notably, salaries and subsidies comprise 79.4% of total expenses, while capital expenditures constitute 9.3%, and the percentage of other expenses (the rest of the expenses) from the total expenses is 11.3%.

Financial balance

Kuwait is estimated to experience a financial deficit of 5.89 billion dinars, marking a 13.5% decrease from the current budget cycle ending on March 31, 2024. Notably, the break-even price is set at $90.7 per barrel.

The ministry attributed the decrease and increase in expenses to many factors, including a cut in allocations for Chapter Two – Goods and Services, particularly fuel for operating stations for the Ministry of Electricity and Water, amounting to 1,199,621 million dinars, a reduction in the Ministry of Health by 192 million dinars, and cuts in Chapter Five – Subsidies.

Allocations were raised by 100 million dinars for refined products and locally marketed liquefied gas to the Ministry of Oil, while subsidies were reduced by 59.302 million dinars in the Ministry of Trade and Industry, and by 116.547 million dinars in other entities. The Ministry of Health saw an increase of 102.262 million dinars for health insurance for retirees, including housewives.

The ministry further revealed that the draft budget for the fiscal year 2024/2025 includes provisions for the creation of 23,732 new jobs and the draft capital expenditures budget is estimated at 1,450 million dinars, with allocations earmarked for ongoing projects totalling 877.3 million dinars, basic maintenance at 571.4 million dinars, and new projects at 1.3 million dinars, encompassing a total of 55 construction projects.

The ministry also noted that it had set conservative oil revenue forecasts, with an average barrel price set at $70, aligning with the current fiscal year’s budget. This projection is expected to result in a budget deficit of 5.8 billion dinars.