Kuwait projects $58.9 billion revenue in draft budget for 2025-26

Kuwait's Minister of Finance has stated that the draft budget for the fiscal year 2025-26 is projected to have a deficit of 6.3 billion Kuwaiti dinars (approximately $20.4 billion). According to the official Kuwait News Agency (KUNA), citing Finance Minister Noura Al-Mashaan, total revenues are expected to reach 18.2 billion Kuwaiti dinars (approximately $58.9 billion), while expenditures are set at 24.5 billion Kuwaiti dinars (approximately $79.3 billion).

The Minister of Finance pointed out that non-oil revenues are projected to increase by 9%, reaching 2.9 billion Kuwaiti dinars (approximately $9.4 billion). However, based on an oil price of $68 per barrel, oil revenues are expected to decrease by 5.7% compared to the fiscal year 2024-25, falling to 15.3 billion Kuwaiti dinars (approximately $49.55 billion). The ministry's report indicates that the break-even oil price needed to cover the deficit is estimated at $90.5 per barrel.

The International Monetary Fund (IMF) stated in December 2024 that Kuwait's economy would likely remain in recession in 2024, but a recovery is expected in the medium term. Economic activity is projected to rebound in 2025, with a growth rate of 2.6%, as oil production cuts begin to ease. Data from the National Bank of Kuwait (NBK) shows that project activity reached its highest value since 2017 last year, totaling 2.7 billion Kuwaiti dinars.

In September 2024, Fitch Ratings affirmed Kuwait's long-term foreign currency issuer default rating at AA- with a stable outlook. The rating agency stated that Kuwait's rating is supported by its robust fiscal and external balance sheets. However, Fitch noted that Kuwait's weaker governance compared to its peers, high dependence on oil, generous welfare system, and large public sector could pose challenges in the long term.

Fitch believes that Kuwait's rating could be upgraded if its institutions and political system can address long-term fiscal challenges by implementing a clear deficit reduction plan that can withstand low oil prices. This assessment reflects the adjustments Kuwait needs to make in its economic structure and policies.