KUWAIT: Kuwait has projected its third-largest budget deficit since the liberation of Kuwait in 1991, at KD 9.8 billion, with lower oil income and mandatory transfers to the pension agency blamed for the shortfall. The 2026/2027 budget, by the Cabinet late Tuesday and unveiled by Finance Minister Dr Yaqoub Al-Refai, projects revenues at KD 16.3 billion and spending at KD 26.1 billion, one of the highest expenditure figures for the country, a statement by the finance ministry said.
Projected spending is 6.2 percent higher than public spending estimates for the current year 2025/2026, which ends on March 31, with wages at KD 15.84 billion and subsidies at KD 3.96 billion, accounting for an overwhelming 76 percent of total expenditures, the ministry said. Subsidies for the next fiscal year are 10.5 percent lower than projections for the current year, according to the finance ministry.
Revenues for the 2026/2027 fiscal year are 10.5 percent lower than the current year, with oil income estimated at KD 12.8 billion compared to KD 15.3 billion in this year’s budget, a drop of 16.3 percent. The finance ministry said it lowered the average oil price for next year to $57 a barrel, down from $68 a barrel in the current year. The minister, however, noted that Kuwait’s fiscal breakeven price – the valuation required to balance the budget – is significantly higher at $90.5 per barrel.
Oil production remains steady at 2.5 million barrels per day. The ministry statement said capital spending for development projects was increased by 36.8 percent to KD 3.1 billion, but still makes up a small 11.8 percent of total spending. Non-oil revenues are projected at KD 3.5 billion, about 19.6 percent higher than in the current year, mainly due to a rise in corporate taxes on foreign companies. Non-oil revenues’ share in public revenues increased to 21.5 percent, up from 16 percent in the current year, according to finance ministry figures.
The ministry said the projected budget deficit for the next fiscal year is a massive 54.7 percent higher than the shortfall in the current year, estimated at KD 6.3 billion. The largest projected deficit in Kuwait since liberation was KD 14.1 billion in 2020/2021, mainly due to the crash in oil prices as a result of the coronavirus pandemic that reduced the average Kuwaiti oil price to $42.6 a barrel. But the actual deficit at the end of the year was KD 10.77 billion, still the largest in over three decades.
The second largest projected shortfall was KD 12.1 billion in the 2021/2022 fiscal year, but at the end of the year, the actual deficit dropped to just KD 4.3 billion, according to official figures. Kuwait has posted a budget deficit every year since the 2014/2015 fiscal year, except for a healthy surplus of KD 6.4 billion in 2022/2023 fiscal year, due to a sharp rise in oil prices, the mainstay for Kuwaiti revenues, to near $100 a barrel. The extended shortfall in Kuwait’s finances followed 16 years of continued surplus (between 1998/1999 to 2013/2014), during which Kuwait accumulated more than a KD 100 billion windfall.
