Kuwait celebrated a significant milestone as it posted its first budget surplus in nine years for the fiscal year 2022-2023, which ended in March, according to the finance ministry’s announcement on Wednesday. The Gulf Emirates, heavily reliant on hydrocarbons for revenue, achieved a budget surplus of $21 billion, buoyed by rising oil prices over the past year.
A statement on the ministry’s website expressed, “The final results of the State Finance Administration were in the black for the first time in nine years.”
Over 92% of the revenue came from oil sales, which experienced a remarkable surge following Russia’s invasion of Ukraine last year. Oil revenues for the fiscal year beginning April 2022 surged by 64% from the previous year, reaching $87 billion, with the average price of a barrel of crude oil for the same fiscal year rising to $97.1, marking a 21.4% increase from the previous year. The country’s oil production stood at 2.7 million barrels per day. However, sales are expected to decline in the current term due to the drop in crude oil prices.
The 2023-2024 budget, announced in January, was based on a conservative price of $70 a barrel. It is projected that the 2023-2024 budget will widen the deficit and reduce total revenues to approximately $63.8 billion.
Despite being one of the world’s leading holders of oil reserves, Kuwait faces political instability due to conflicts between an elected parliament and the government installed by the ruling family. This has affected investor confidence and hindered economic reforms. The country has experienced seven general elections in just over a decade, contributing to ongoing political tensions.
Kuwait’s strong sovereign wealth funds and minimal debt position it as a significant player in the global financial landscape. However, the challenges stemming from political instability persist, and recent elections have resulted in a change of government for the fifth time in less than a year, further affecting the nation’s political landscape.