Kuwait – Mubasher: Kuwait is expected to record its first fiscal deficit since 1999 in 2016, as oil prices remain weak and spending plans pick up, said BMI Research, a Fitch Group company.
The research firm added that such deficit will be short-lived, as small surpluses are recorded from 2017 onwards given cutbacks in expenditure; however, the huge surpluses of much of the 2000s will become a distant memory.
“Given the minimal deficit, reserves may be tapped or, as has been mooted, Kuwait will turn to the bond market. Either way, absent of a further sustained decline in oil prices, Kuwait's fiscal position is healthy,” said BMI Research.
The deficit of 2016 will amount to 0.5% of GDP, before small surpluses are recorded from 2017 onwards. Kuwait's fiscal position will remain among the healthiest in the Middle East as its short-lived deficit is easily manageable given the size of its reserves (around $630 billion in its sovereign wealth fund). Overall, this marks a new era from the double-digit surpluses recorded in the past five years, which will not be repeated over the next decade, concluded the research firm.
