KUWAIT, May 11 (KUNA) -- The 2009-2010 fiscal is projected to post a new surplus amounting to approximately KD 4.8 billion despite fall in oil income, according to a report released by the National Bank of Kuwait on Monday.
The NBK report said the drop in oil reruns would be compensated by the state declared plan for slashing public expenditure.
"Based upon the government's projected expenditure plans, but assuming that spending eventually comes in 5-10 percent below the budget numbers, we project that Kuwait's budget balance would come in at between KD-0.9 billion (deficit) and KD+4.8 billion (surplus) next year (before payments of 10 percent of revenues to the RFFG (Fund for Future Generations). This is far better than the government's own projection of a KD 4 billion deficit, though still much lower than some of the spectacular surpluses recorded in recent years," the report said in part.
The forecast surplus is also against the background of higher oil prices, after a period during which the prices fluctuated around USD 40 per barrel (pb) in the first three months of 2009. Moreover, the price of Kuwait Export Crude (KEC) rose to above USD 55 pb mark on May 7th, its highest since early November.
To some extent, the rise seemed driven by the continued implementation of cuts in crude output announced by the OPEC cartel since last September, as the organization sought to compensate for the steep decline in global oil demand.
But the rise has also coincided with the return of a degree of relative optimism surrounding global economic conditions, signs of improving health amongst previously-troubled financial institutions, and a rally in equity markets, all of which suggest that some sort of world economic recovery could soon be underway.
In addition to these tentative signals, the nine-month rally in the US dollar appears to have lost momentum, perhaps reducing pressures on crude prices to fall in order to stabilize prices in foreign currency terms. (end) amf.na.rk KUNA 111456 May 09NNNN