Kuwait projects record deficit as oil price persists

OPEC member Kuwait has projected a record budget deficit for the fiscal year starting 1 April due to the sliding price of oil, the finance ministry said on Thursday.

The shortfall for the 2016-2017 fiscal year is estimated at 11.5 billion dinars ($38 billion) due to a sharp decline in oil revenues, the ministry said on its Twitter account. 

But spending was estimated at 18.9 billion dinars ($62bn), just 1.6 percent lower than in the current year, the ministry said.

Revenues were projected at 7.4 billion dinars ($24bn), of which oil income is estimated at $19.1 billion - or 78 percent of public revenues.

Last week, Kuwait's Emir Sheikh Sabah al-Ahmad al-Sabah said the country would cut hefty subsidies on fuel and power, raising the prices of petrol, electricity and water.

In the past, income from oil contributed more than 94 percent of revenues in the Gulf emirate, before the decline in crude prices.

Kuwait had projected a shortfall of $23 billion in the current fiscal year, which ends 31 March. It will be the country's first deficit after 16 years of surpluses.

The tiny Gulf state, which has a native population of just 1.3 million, has built around $600 billion in fiscal reserves in those years.

Gulf states are being hit hard by a combination of slow global growth - including in China - and Iran's return to the world market following a landmark nuclear deal with world leaders.

Oil prices fell to a 12-year low earlier this month.

In December, Saudi Arabia raised the price of petrol at the pumps by 40 percent as part of a plan to cut subsidies, after issuing its 2016 budget projecting a deficit of 326 billion riyals ($87 billion).