Kuwait - Mubasher: The government of Kuwait posted a 13.4% budget deficit of KWD 4.6 billion for the fiscal year 2015/2016, the first in 17 years, and after five years of budget surplus averaging 21% of GDP, according to a report by the National Bank of Kuwait (NBK).
The large deficit is a result of the decline in oil prices, and NBK’s Economic Research expects a similar deficit of 13% of GDP for FY2016/2017 as the low oil price environment prevails.
The government saw revenues decrease for the second consecutive year largely due to lower oil prices. Revenues declined 45% in in FY2015/2016 to KWD 13.6 billion, indicated NBK's report.
Oil revenues dropped by 46% to KWD 12.1 billion or 35% of GDP, the lowest ratio in a decade. Nonoil revenues were also down 38% notably in due to the suspension of Iraqi reparation payments, the report explained.
According to the report, other nonoil revenues actually rose 11%, as Income tax revenues and customs taxes and fees increased 41% and 9%, respectively, representing almost 30% of total nonoil revenues.
The Low oil prices prompted the government to reduce spending notably, with cuts mostly hitting non-essential expenditures with little impact on the domestic economy, the report indicated.
However, the low oil price environment did not deter the government from pursuing its capital spending plans, pushing its execution pace to its highest in a decade, added the report.
