Kuwait overcomes 9 years of debt thanks to booming oil revenue

By Al Mayadeen English
Source: Bloomberg
26 Jul 2023 23:48

A new report by Bloomberg reveals that Kuwait has overcome its years of debt due to an oil boom, but with oil prices dropping, the country's budget is at risk.

A photo of the ground of the Kuwait Petroleum Corporation. (AFP)

Kuwait overcomes nine years of budget deficit following a boom in oil revenue and the implementation of a more controlled spending strategy, according to a new report by Bloomberg.

According to the information disclosed, Kuwait, who's also an OPEC member, has achieved a surplus of $21 billion from the beginning of 2023 until the month of March, marking an increase of 55% in revenue relative to the previous year.

This is to be compared with the shortfall of 2021-2022 of about $14.01 billion in Kuwait.

The country's Acting Finance Minister, Saad Al-Barrak said, according to Bloomberg, that the country's accounts “have experienced a healthy recovery in terms of liquidity, driven mostly by rebounding crude-oil prices during the fiscal year and aided by controlled expenditure.”

Similarly, the OPEC country is home to 8.5% of the world's oil reserves

Years of internal strife have hindered efforts to diversify the oil-dependent economy and attract international investment, leaving Kuwait particularly exposed to unpredictable energy prices and lagging behind competitors such as Qatar and the United Arab Emirates.

However, with the price of oil down more than 20% from over $100 a barrel a year ago to around $83 on Wednesday, there may be worse news on the horizon. As such, Bloomberg reported that after lowering its expected oil price to $70 and boosting spending, Kuwait has predicted a 5 billion dinar deficit for the fiscal year ending in March 2024.

According to Al-Barrak, who has also served as Kuwait’s oil minister, the country has “one of the lowest sovereign debt to GDP levels globally."

Sheikh Ahmad Nawaf Al-Sabah reappointed as Kuwaiti PM

The Kuwaiti government's Prime Minister, Sheikh Ahmad Nawaf Al-Ahmad Al-Sabah, was reappointed by an Emiri order on June 18.

The Emiri Court announced that Sheikh Ahmad Nawaf Al-Ahmad has been assigned to immediately carry out the decision and form the country's new 15-ministry cabinet, according to a statement published by the Kuwait News Agency (KUNA).

It is worth noting that in March, Sheikh Ahmad Nawaf Al-Sabah was re-appointed by the Kuwaiti Crown Prince, Sheikh Meshal Al-Ahmad Al-Sabah, to form a new government more than one month after the former government resigned due to political rifts with the parliament, KUNA reported.

Fiscal reforms, in addition to other bills regarding the Gulf country's economic policies, have caused tensions between the government and the National Assembly, leading the former to announce its resignation in January.

The government submitted its resignation to the political leadership in the wake of the recent crisis with the National Assembly against the backdrop of popular laws, as well as the two interpellations directed at Finance Minister Abdul Wahhab Al-Rashid and Minister of State for Cabinet Affairs Barak Al-Shitan.