Kuwait's FY25/26 Deficit Widest Since Pandemic as Oil Revenues Plummet

Kuwait's fiscal deficit has widened to its largest since the pandemic in FY2020/21, reaching KD 7.1 billion (15 percent of GDP) for the year ended March 31st, according to the country's closing account. This represents a significant increase from the previous year's deficit of KD 1.1 billion and exceeds the authorities' own budget deficit projection by KD 800 million.

The large decline in oil revenues was the main driver behind this widening gap, dropping by 30 percent year-over-year to KD 13.6 billion due to slower-than-expected production cuts and disruptions caused by the US-Iran conflict. In contrast, non-oil revenues continued to increase but remained relatively low at a 6 percent rise.

Spending rose on compensation of employees (+5 percent y/y) which offset reductions in subsidies (-8.0 percent) and other outlays (-4.0 percent). Capital expenditure saw a positive trend with an increase of 17 percent y/y to KD 1.8 billion, contributing positively to economic development.