By Ahmed Hagagy and Alexander Cornwell
KUWAIT, Jan 14 (Reuters) - Kuwait expects a budget deficit of 9.2 billion dinars ($30.33 billion) in the fiscal year starting on April 1 after it has deposited 10% of total revenue into the country’s sovereign wealth fund, government figures released on Tuesday showed.
That represents a deficit increase of 19% compared with the previous year, for which the Gulf state had projected a 7.7 billion-dinar shortfall.
Kuwait projects spending of 22.5 billion dinars for the 2020-2021 budget, according to the figures released at a news briefing by Finance Minister Mariam Aqeel Al-Aqeel.
That represented no rise in overall spending from the year before, implying that a projected drop in overall revenues, to 14.8 billion dinars from last year’s 16.3 billion dinars, accounted for the deficit increase.
The budget assumes an oil price of $55 a barrel, the minister said, down from the $55-65 per barrel Kuwait had assumed in its previous budget. Oil revenues are expected to account for 87.3% of total revenues in the next fiscal year.
The 2020-2021 deficit will be covered by Kuwait’s General Reserve Fund, one of the wealth funds managed by Kuwait Investment Authority, said the minister.
A major oil exporter, Kuwait was not hit hard when oil prices sank in 2014-2015, but it has not tapped global debt markets since its debut $8 billion debt sale in 2017, because parliament has yet to pass a law that would allow it to raise its debt ceiling and to issue debt with longer maturities.
That has raised concerns among analysts that the fund might be depleted over the next few years. The minister did not respond when asked how long the country could continue to use the reserve fund to finance its deficit. (Reporting by Ahmed Hagagy and Alexander Cornwell; writing by Davide Barbuscia; editing by Edmund Blair, Larry King)