Kuwait headed for record income

Kuwait was forecast on Tuesday to post record revenues and a budget surplus in the current 2011/2012 fiscal year on the back of high oil prices. The oil-rich Gulf state which amassed budget surpluses of more than $200 billion in the past 12 fiscal years is expected to post a record $41 billion in windfall this year, National Bank of Kuwait said in a report. OPEC's third largest producer is also expected to post record revenues of $106 billion provided prices for Kuwaiti oil remain above $100 a barrel, the bank said. It based the forecast on a price for Kuwaiti oil ranging between $104 and $112 a barrel for the whole year, around 35 percent higher than the average price last year of $82.5 a barrel. Since the start of the current fiscal year on April 1, the price of Kuwaiti oil has averaged around $109 a barrel, the bank said. Kuwait is producing between 2.6 million and 2.7 million barrels a day, well in excess of its OPEC quota of 2.2 million bpd, according to Oil Minister Mohammed al-Baseeri. In the past fiscal year ending March 31, Kuwait posted a budget surplus of $19.5 billion after revenues hit an all-time high of $79 billion on high oil price. Oil income makes up more than 93 percent of Kuwaiti revenues. The budget for the 2011/2012 fiscal year projects a deficit of $22 billion, on the basis of a conservative oil price of $60 a barrel. Although Kuwait foreign assets have increased to more than $300 billion, Emir Sheikh Sabah al-Ahmad Al-Sabah on Monday warned against the misuse of assets and formed a team to study measures to rectify the domestic economy. A sharp increase in spending, which has tripled in the past six years, has caused alarm that the emirate could face serious consequences if oil prices crash like in 2008. The Gulf state adopts a cradle-to-grave welfare policy where a majority of citizens are employed by the government, receive handsome salaries, pay no taxes and receive services at low charges or for free. Under Kuwaiti law, 10 percent of revenues are deducted every year to go into the emirate's sovereign wealth fund. Returns on the fund are not included in the budget.