CAIRO, Aug 7 (Reuters) – Kuwait’s budget deficit increased 174.8 percent in the 2020-21 year to 10.8 billion dinars ($35.5 billion), the finance ministry said on Saturday, noting it was the highest deficit in the country’s fiscal history.
Revenue dropped to 10.5 billion dinars in the financial year that ended on March 31, down 38.9 percent, while expenditure increased 0.7 percent to 21.3 billion dinars, the ministry said in a statement.
Kuwait’s parliament in June approved the 2021-22 state budget proposed by the government in January, which projected 23.05 billion dinars in expenditure and a deficit of 12.1 billion dinars.
The parliamentary vote came amid a stand-off between government and parliament that has delayed reforms in the OPEC member state.
Oil revenue slumped 42.8 percent in 2020-21 to 8.8 billion dinars, while other revenue fell 6.5 percent to 1.7 billion, the ministry said. Wages and subsides accounted for 73 percent of total expenditure, while capital and infrastructure expenditure accounted for 9 percent.
The average Kuwaiti crude selling price for the fiscal year reached $42.36 per barrel, with average oil production of 2.5 million barrels per day, the ministry said.
“The deficit is attributed to the sharp decline in oil prices and minimal government operations as a result of the COVID-19 pandemic,” Finance Minister, Khalifa Hamada, said in the statement.
“The cabinet is prepared to discuss the closing accounts with the parliament and to move forward in implementing real, effective, and sustainable solutions to the challenges facing public finances.”
The State’s closing accounts must be ratified by parliament in order to be considered final.
Earlier this year, Hamada said an increase in oil revenue due to higher oil prices does not cover the Gulf state’s budget obligations and Kuwait would need oil prices of $90 per barrel to balance the budget.
Brent crude oil futures settled at $70.70 on Friday, while US West Texas Intermediate (WTI) crude fell to $68.28 a barrel.
($1 = 0.3007 Kuwaiti dinars)Reporting by Ahmad Elhamy; Editing by Kirsten Donovan