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Kuwait raises oil price by $3 a barrel

KUWAIT: Opec member Kuwait said on Sunday it will calculate revenues in the state budget for the fiscal year starting July 1 at $13 a barrel, raising it by $3.

Kuwait's government also hoped in a statement issued after its weekly meeting that Opec's latest accord to raise output would stabilise the market without harming its interests.

The cabinet "expressed hope that the accord would achieve the desired stability in a manner which safeguards the interests of producers and consumers alike," said the statement.

The cabinet also discussed the country's budget for the next fiscal year and revenues were calculated "at $13 a barrel (average) price in line with the principle of caution against any fresh fluctuations in world prices."

The statement did not give other details for the new budget.

By mid-March, Kuwaiti crudes averaged $22.06 a barrel for the fiscal year which started July 1, 1999, compared with $11.8 a barrel for the previous fiscal year. Kuwait's budget revenues were calculated at $10 a barrel for both years.

The recent rise in world prices is expected to wipe out a projected 1999/2000 deficit of $7 billion and help the Gulf Arab state show its first major budget surplus in some 18 years. Experts say the surplus could reach $3 billion if its crude stays over $23 for the rest of the fiscal year. Kuwait crudes are currently selling between $21.73 and $23.72 a barrel.

Opec decided last week to raise its output by 1.7 million barrels of day (bpd) from April 1 to help bring down world prices which had risen to nine-year highs.

Close U.S. ally Kuwait sits on almost 10 percent of the world's proven oil reserves. Its Opec quota under the new accord rose to 1.98 million bpd from 1.836 million bpd.

The cabinet "stressed the need to continue to work to rationalise and contain spending and stop all forms of waste in the budget," the statement added.

The government has long promised ambitious and far-reaching economic reforms but some members of the country's elected parliament have told it not to expect support for such measures which could raise the cost of living for Kuwaitis while the state continued "wasteful spending".

"The Government stressed the need to abide by the economic and financial reform plan and seek to boast non-oil income," the statement said in yet another sign that the state plans to push ahead with the steps which could reduce generous subsidies and raise the cost for some basic services.

The 4.295 billion dinar 1999/2000 ($14 million) budget carries a projected gross deficit of 2.293 billion dinars and a net deficit of 2.075 billion dinars.

Total income, including 463 million dinars in non-oil revenue, is projected at 2.224 billion dinars in the current budget, compared with an actual 2.798 billion the previous year when Kuwait showed an actual shortfall of 1.522 billion dinars.-Reuters