According to a report by NBK Economic Research, Kuwait’s year-to-date fiscal deficit for the first 10 months of the current fiscal year (FY2023/24) has narrowed by KD635 million ($2.075 billion) from the balance in December to KD1.1 billion ($3.595 billion) in January.
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This improvement is primarily attributed to a 15 percent month-on-month increase in oil revenues, reaching KD16.4 billion ($53.31 billion) year-to-date, and a 24 percent month-on-month increase in non-oil revenues, reaching KD1.45 billion. These gains have more than offset the 10 percent month-on-month increase in expenditures, which reached KD18.9 billion.
Furthermore, within the expenditure category, capital spending remained low at KD821 million, accounting for only 45 percent of the government’s full-year budget allocation of KD1.8 billion.
With two months left to be accounted for, the cumulative expenditure figure represents 72 percent of the full-year budget allocation. However, the report predicts that the deficit will likely widen by the end of the fiscal year in March due to higher spending in March, following historical spending patterns. The bank estimates a deficit of over KD3 billion, as around KD7 billion in budgeted spending remains unspent.
In March, Fitch Ratings reaffirmed Kuwait’s foreign and local currency sovereign credit ratings at AA- with a stable outlook. Moreover, this rating reflects a minimal risk of default and demonstrates Kuwait’s strong ability to meet its financial obligations. Fitch considers Kuwait’s fiscal and external balance sheets to be among the strongest of all Fitch-rated sovereigns.
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