Oil and Public Finance – February 2020

By the end of February 2020, the 11th month of the current fiscal year 2019/2020 ended, average price for Kuwaiti oil per barrel was at US$ 56.1 for February, which is higher by US$ 1.1 per barrel or by 2.1% than the hypothetical price estimated in the current budget at US$ 55 per barrel. The average price for the Kuwaiti oil barrel for the first 11 months of the current fiscal year scored US$ 64, which is lower than the average Kuwaiti oil price for the past fiscal year 2018/2019 by 6.6% that was at US$ 68.5. The average price for February is lower by 18.1% than the average price for the past fiscal year, also lower by US$ 23.9 per barrel than the budget’s parity price at US$ 80 per barrel, according to the Ministry of Finance after deducting 10% from total revenues to the future generations’ reserve.

According to the monthly follow-up report of the Ministry of Finance in February 2020, the actual oil revenues until the end of February of the current fiscal year amounted to KD 14.310 billion, and therefore it is expected that the oil revenues for the entire fiscal year 2019/2020 will be about KD 15.6 billion. According to the report, actual non-oil revenues as of the end of February amounted to KD 1.446 billion, and would amount to KD 1.6 billion for the current fiscal year. Therefore, it is expected that the total budget revenues for the current fiscal year will amount to KD 17.2 billion.

Comparing this figure with the expenditures allocations in the amount of KD 22.5 billion, it would be likely that the public budget would score a deficit of KD 5.3 billion. This deficit might increase if oil prices continue to decrease as they are currently at their lowest level because of Coronavirus. However, the actual deficit in the final account might be lower if the final account shows savings in estimated expenditures for entire fiscal year.