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Thursday, Mar 13, 2025

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Kuwait Anticipates a 12% Increase in Budget Deficit for the 2025-2026 Fiscal Year.

Kuwait projects a budget shortfall of $20.4 billion for the 2025-2026 period due to economic difficulties and a decrease in oil income.
The Kuwaiti government has forecast a notable increase in its budget deficit for the fiscal year 2025-2026, estimating an 11.9% rise to reach 6.31 billion Kuwaiti dinars ($20.4 billion).

This anticipated deficit marks an increase from the current fiscal period's expected shortfall of 5.6 billion dinars.

On February 2, the Cabinet approved the draft budget, which will be forwarded for final approval by Emir Sheikh Meshal Al-Ahmed Al-Sabah.

The draft budget, covering the period from April 1, 2025, to March 31, 2026, anticipates total revenues of 18.2 billion dinars, a slight decrease from 18.9 billion dinars projected for the current fiscal year.

Projected expenditures are estimated at 24.5 billion dinars, which is slightly lower than the 24.6 billion dinars allocated in the current fiscal year.

The International Monetary Fund recently predicted a 2.8% contraction in Kuwait’s economy for 2024, with a recovery anticipated in 2025. The IMF pointed out risks associated with Kuwait's dependence on oil exports and delays in crucial economic reforms, although it acknowledged some improvement in the non-oil sector.

In spite of the anticipated full-year deficit, Kuwait recorded a budget surplus of 150.4 million dinars for the first half of 2024-2025 due to higher revenues and decreased spending.

The draft budget projects oil revenues of 15.3 billion dinars, reflecting a 5.7% decline compared to the current fiscal year.

Non-oil revenues are projected to grow by 9% to 2.92 billion dinars, as stated by Finance Minister Noura Al-Fassam.

Wages and subsidies are expected to comprise 79.5% of total expenditure, with capital expenditures constituting only 9.1%.

The government has set the budget for an oil price of $68 per barrel for 2025-2026, whereas the breakeven price needed to address the fiscal deficit is estimated at $90.5 per barrel.
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