Kuwait has recently given the green light to its state budget for the fiscal year 2024-2025, projecting a deficit of $19.1 billion (KWD5.89 billion) for the period starting April 1, 2024, and concluding on March 31, 2025. This anticipated deficit marks a 13.5 percent decrease compared to the forecast for the current fiscal year, according to statements from the country’s finance ministry.
The draft budget outlines an estimated revenue of KWD18.66 billion, reflecting a 4.1 percent decline from the current year’s estimate. However, non-oil revenue is expected to rise by 5.7 percent to KWD2.42 billion, indicating a diversified income stream for the Gulf nation.
In an effort to curb spending, Kuwait has forecasted a 6.6 percent reduction in expenditure for the fiscal year 2024/25, totaling KWD24.6 billion. A significant portion, 79.4 percent, will be allocated to “salaries and subsidies,” underlining the government’s commitment to maintaining social support programs.
Of the total expenditure, the government plans to allocate 9.3 percent towards capital expenditure, indicating an emphasis on investments for future growth. Meanwhile, other expenses will make up 11.3 percent of the budget, covering various operational costs.
The 2024/2025 budget projections are based on a daily oil production rate of 2.7 million barrels, with Kuwait’s breakeven point set at $90.7 per barrel. The government’s reliance on oil revenues highlights the ongoing significance of the energy sector to Kuwait’s economic stability.
This budget comes on the heels of Kuwait posting a surplus of KWD6.4 billion in the 2022/23 fiscal year, ending a streak of nine consecutive years of budget deficits. The surplus was attributed to a surge in oil revenue and disciplined spending practices, providing a much-needed boost for one of the Middle East’s leading crude oil producers.
Despite this positive outlook, the International Monetary Fund (IMF) has cautioned that Kuwait’s economic recovery is still in progress, with substantial risks remaining in the country’s outlook. The IMF notes ongoing challenges, including political gridlock between the government and parliament, which continues to hinder the implementation of crucial reforms.
Last August, the IMF acknowledged Kuwait’s economic resilience, stating that although there was a decline in the country’s oil GDP in 2023 due to production cuts, non-oil GDP growth remained robust. The growth was primarily driven by domestic demand and is expected to remain steady over the medium term, providing a foundation for the nation’s economic stability in the face of global uncertainties.
