Kuwait deficit concerns are rising as the government forecasts a record shortfall for the next fiscal year. Officials estimate total income at 16 billion Kuwaiti Dinar, with 79 percent coming from oil revenues. Meanwhile, expenditures could reach 26 billion KD, creating a deficit near 9.8 billion KD.
This Kuwait deficit will likely require borrowing from international banks to cover the gap. The country aims to protect its overseas investments, valued at nearly $1 trillion, to generate ongoing revenue. Analysts note that the budget assumes oil prices might fall to 57 dollars per barrel, which many experts consider unlikely.
Oil markets remain stable, and OPEC+ members are expected to prevent prices from dropping sharply. A sudden decline of more than 31 dollars per barrel could push some oil producers toward financial difficulties. Therefore, the government expects oil revenues to remain strong despite projecting a conservative scenario.
The Kuwait deficit stems partly from rising expenditures, which increase by nearly 2 billion KD compared to the current year. In contrast, projected total income remains slightly lower than this year. Officials emphasize the importance of maintaining revenue from the sovereign wealth fund to cover recurring budget gaps.
Global oil demand remains moderate, while stockpiles hold an extra 2.5 million barrels, adding pressure to prices. Nevertheless, authorities predict oil rates will stay around 68 to 70 dollars per barrel. Only major changes, such as Iran resuming full oil exports, could force OPEC+ to adjust supply.
Kuwait faces challenges transitioning away from oil dependence. The sovereign wealth fund generates revenue but does not create enough jobs for more than 15,000 graduates entering the workforce annually. Capital spending accounts for only 12 percent of the budget, limiting development projects that could provide long-term employment.
The government plans to use borrowing and existing reserves to manage the Kuwait deficit. Experts call for innovative approaches to diversify income sources beyond oil and the sovereign wealth fund. Establishing research initiatives and new investment strategies could help address recurring shortfalls in future budgets.
Officials aim to maintain fiscal stability while supporting ongoing public services and economic growth. Despite these hurdles, Kuwait continues to invest strategically to safeguard its financial future.
