LOC15:02
12:02 GMT
KUWAIT, Feb 8 (KUNA) -- The interim public finance figures for the first nine months of fiscal year 2015/16 (FY15/16) reveal the resilience of Kuwait's Government spending, amid a sustained low oil price environment, said an economic briefing.
Despite a decline from last year in overall spending, wages and salaries as well as capital spending were up for the period, National Bank of Kuwait (NBK) added in its briefing, released on Monday.
It noted that the rise in capital spending highlights an accelerated pace of project execution. The latter of course continues to support economic growth.
Meanwhile, Government revenues were off, largely due to decline in oil price, it said, adding that as a result, the Government has recorded a deficit of KD 2.5 billion during the 9-month period. (USD 1:00 equals KD 0.300)
The figures estimate FY15/16 will close with a deficit of KD 4.3 billion before transfer to the Reserve Fund for Future Generations (RFFG), or 10.8 percent of GDP.
As of December, Government spending stood at KD 9.2 billion fiscal-year-to-date (fytd); this figure was 15 percent lower than the same period last year and included deferred payments of KD 1.14 billion due to the Ministry of Electricity and Water (MEW) and the Public Institute for Social Security (PIFSS).
However, at 48 percent of the FY15/16 budget, the spending rate is slightly higher than the five-year 9-month average of 44 percent.
Actual spending was even higher at KD 13.9 billion, according to new data being published by the Ministry of Finance and based on actual withdrawals taken from the Government accounts at the Central Bank of Kuwait, it added, indicating this accounting difference is related to delays in reporting expenditures by some ministries.
Current spending was down despite robust growth in wages and salaries. A 16 percent y/y decline in current spending was driven mainly by the decline in the cost/price of fuel and electricity subsidies.
Miscellaneous expenditures and transfers (chapter 5) were down by 15 percent year-on-year (y/y) because of the lower cost of fuel subsidies.
Similarly, spending on goods and services declined by 51 percent y/y as spending on fuel for electricity and water (MEW) declined by 60 percent y/y.
Meanwhile, wages and salaries rose to KD 2.8 billion fytd, up nine percent y/y. Capital spending was another closely watched area that maintained robust growth, rising by nine percent y/y.
This reflects the commitment to the Government development plan, which has gained momentum recently.
Indeed, capital spending thus far in FY15/16 stood at 42 percent of the full-year budget, better than the five-year average of 33 percent, reflecting the improved implementation.
Spending on projects, maintenance and land purchases reached KD 908 million, up by 8.6 percent y/y. The expenditures of the Ministry of Public Works continue to soar, recording a 53 percent jump from last year to reach KD 335 million, in line with the jump in projects awarded in 2015, it indicated.
Total Government revenues were KD 11.4 billion in the nine months, down by 46 percent y/y, it said.
Oil revenues have declined as a result of the low oil price. The Kuwait export crude (KEC) price averaged USD 48 per barrel during the first nine months of FY15/16 and only USD 31 in December, it said.
Oil prices are likely to remain subdued for the remaining months of the fiscal year, it said, expecting that oil revenues to reach KD 12.4 billion by the end of the fiscal, it showed.
Non-oil revenues were down by half from the previous fiscal year fytd, largely on a suspension in payments from the UN Compensation Commission (UNCC), it said.
The suspension of the UNCC payments by the Government reduced miscellaneous revenues and fees by almost KD one billion or 93 percent, it said, adding that this was compounded by declines in service charges, which were 13 percent lower mainly on reduced collections from housing, and electricity and water service charges.
Still, there were improvements elsewhere, with income tax revenues up by 42 percent y/y, as tax revenues on non-oil foreign companies and corporate income tax, it concluded. (end)
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