ShareTotal expenditure down 3.3% - Wages, subsidies account for 73% of all expenditure
Finance Minister Dr Nayef Al-HajrafKUWAIT: The ministry of finance yesterday announced Kuwait's closing accounts for the fiscal year ending March 31, 2018. The state's accounts recorded KD16.0 billion in revenue, KD19.2 billion in expenditure, and closed with a fiscal deficit of KD 4.8 billion after accounting the transfer of 10 percent of total revenue to the State's Future Generations Fund (FGF) as mandated by law. Kuwait's fiscal year starts on April 1st and ends on March 31st.
Minister of Finance Nayef Al-Hajraf said: "With capital expenditure comprising 16.7 percent of total expenditure and its healthy growth of 22.8 percent from the previous year [actuals], it's clear that the government is delivering on its commitment to growing the national economy, and executing infrastructure projects inline with the Kuwait National Development Plan: Vision 2035 'New Kuwait'.
"The state is currently instituting a structural economic and fiscal reform program, and control of expenditures is a necessary precondition for these reforms to succeed over time. We believe that reform starts with curbing wasteful spending, increasing collection rates of dues to the government's various entities, while maintaining a healthy rate of capital expenditure on infrastructure and minimizing the impact of our fiscal reforms on the Kuwaiti people.
"The government is currently working on bills to improve public finance and budgeting, which will dramatically increase the proficiency of the state's budgeting process as well as a Government Borrowing Act that will provide sufficient liquidity as Kuwait continues on its path of fiscal reform."
Closing Accounts Highlights: Revenue
* Oil revenue: KD 14.3 billion, up 22.2 percent from last year.
* Non-oil revenue: KD 1.7 billion, up 21.7 percent from last year, reflecting success of fiscal and collection reforms implemented since 2016.
* Total Revenue: KD 16.0 billion up 22.1 percent from last year
* Average Kuwaiti crude selling price for the fiscal year: $54.15
Closing Accounts Highlights: Expenditure
* Wages and subsidies: KD 14.0 billion, up 8.4 percent from last year due to an increase in subsidy cost as a result of increased oil prices and constituting 73 percent of all expenditure.
* Capital Expenditures: KD 3.2 billion, up 22 percent from last year and constituting 16.7 percent of all expenditure.
* Total Expenditures: KD 19.2 billion, under budget by 3.3 percent and up 8.7 percent from last year's closing accounts.
Closing Accounts Highlights: Fiscal Balance
* The recorded fiscal deficit for the year pre-FGF transfer is KD 3.2 billion. The recorded fiscal deficit post-FGF transfer is KD 4.8 billion, down 18.1 percent from last year. This is the fourth consecutive year where Kuwait records a deficit.
* By law, the state transfers 10 percent of total annual revenue to the Future Generations Fund (also known as Kuwait's sovereign wealth fund) managed by the Kuwait Investment Authority. This year's transfer total was KD 1.6 billion.
* The actual deficit for the year ending on March 31, 2018 will be covered by withdrawals from the General Reserve Fund (GRF, the state's treasury) in the absence of a law governing the issuance of sovereign bonds. The last active debt law expired in Oct 2017. The law is expected to be renewed in the upcoming legislative session. In Kuwait, all laws must pass through its freely-elected parliament.
* By law, the closing accounts do not include revenue from the FGF, which is managed by the Kuwait Investment Authority. All investment revenues from FGF activities are reinvested by the Fund. - Press release
