The Japanese MFUG Bank expects that Kuwaiti budget deficit during the current fiscal year 2020/2021 will reach about KD 7 billion, equivalent to $23 billion in case the oil prices reach $43 per barrel and the deficit rate of the gross domestic product reaches 16.2 percent. This is the closest scenario to happen, according to the bank’s expectations.
The bank also expects the Kuwaiti budget deficit will reach about KD 8 billion, an equivalent of $27 billion, if the price of a barrel reaches $30 and the deficit rate of the gross domestic product reaches 19.1 percent.
Finally, if the price of a barrel reaches $50, Kuwaiti budget deficit may reach about KD 3.3 billion (equivalent to $11 billion) with a deficit in the gross domestic product that may reach 7.7 percent, thus Kuwait occupies third position in the Gulf. These expectations come despite the mandate of the Council of Ministers to the Finance Ministry to reduce the budget for fiscal year 2020/2021 in coordination with all government agencies, at a minimum of 20 percent.
Kuwait has a share of 11 percent of the total budget deficit of the Gulf Cooperation Council states for the current year 2020 with a barrel price reaching $50, where the total budget deficit of the Gulf Cooperation Council countries for the current year 2020 is $208 billion as the price of a barrel reaches $43, and at the price level $30, while the deficit may reach $262 billion.
The deficit in the Gulf countries may shrink if the price of a barrel rises above $50 to reach $152 billion. Kuwait is the number one country in the Gulf that is dependent on oil, with oil sector revenues accounting for 90 percent of public revenues. Since the beginning of the current fiscal year that began on the first of April, the average price of Kuwaiti oil has reached $21.5 per barrel, representing about half of the average price of oil the Japanese bank’s report expects throughout the year, while oil is improving in recent days, pushing the price to $34.5 a barrel right now.
Saudi Arabia came first in the Gulf, with the budget deficit reaching $119 billion if the price of a barrel reaches $43, and then the deficit rate of the gross domestic product hitting 15.2 percent. The budget deficit may increase to $151 billion with the price of a barrel reaching $30, and the deficit may shrink to $96 billion if the price of a barrel reaches $50, as the percentage of deficit in the gross domestic product drops to 12.3.
The UAE came second after Saudi Arabia, as the budget deficit reached $45 billion, with the price of a barrel set at $30, and the deficit rate of the gross domestic product reaching 10.9 percent. This deficit retracts from the price of a barrel to $43 to reach $37 billion, and the deficit rate of the gross domestic product is 8.9 percent. This deficit will shrink when the price of a barrel reaches $50 to record $23 billion, and with a deficit of 5.6 percent of the gross domestic product.
Oman ranked fourth among the countries of the Gulf Cooperation Council whereby the budget deficit may reach $18 billion when the price of a barrel reaches $30, with a deficit of 23.3 percent of the gross domestic product.
This deficit shrinks with the price of a barrel rising to $43 to reach $13 billion with a deficit of 16.1 percent of the gross domestic product until this deficit improves with the price of a barrel reaching $50 to record $11 billion, with a deficit of 14.3 percent of the gross domestic product. Qatar ranked fifth in the Gulf, bringing the budget deficit during the current year 2020 to $15 billion, with the price of oil reaching $30 a barrel and a deficit of 7.7 percent of the gross domestic product.
This deficit gradually improves with the price of a barrel reaching $43 to record a budget deficit estimated at $12 billion while the deficit of gross domestic product may reach 6.2 percent. If the barrel rises to the level of $50, the deficit will decrease to $7 billion, with a deficit of gross domestic product that may reach 3.6 percent