Kuwait’s Budget surplus of $ 2 Billion in the fiscal year 2001/2002 ending March was substantially better than the official projected deficit of $ 6 Billion before the 10% allocation to the Reserve Fund.
The current account can also be expected to record a similar surplus to last year’s $8.5 Billion. Averaging 26% of the GDP, it was second in size to the record of US $15 Billion realized in 2000. GDP contracted by 9% to $33 Billion as oil prices slid from their 2000 levels. In real terms, GDP is reported to have contracted by only 1%.
Kuwait’s Export Crude averaged $21.3 per barrel versus $25 in 2000. At the same time curtailed production by OPEC, cut Kuwait’s official production target by an average of 2.5%. With Kuwait’s output target holding steady this year at 1.74 million barrels per day, production should be 9% below last year’s average. Nevertheless, we expect to see GDP growth recovering to positive territory. A higher oil price is but one factor contributing to this growth, with Kuwait Export Crude likely to remain above the year to date average of $ 23. Another contributor is the complete restoration of refining capacity by end September at Mina Al-Ahmadi Refinery following the June 2000 explosion that destroyed 3 crude distillation units. Refining capacity should increase by 15% on average for the year as a whole though actual production is likely to increase by less than that.
Subdued outlook for the private sector
The performance of local equities as well as the private sector as a whole remains constrained by the limited investment opportunities in the country, given the relative dominance of the public sector in
most economic activities. Outside the financial sector, signs of a recovery in private sector activity are evident in trade and construction. Services and industry should catch up as growth in government spending trickles down. Still, the outlook for private sector growth remains subdued with political issues delaying key legislation concerning reforms, privatization and opening up the oil sector.
Kuwait GDP
Following the June 2000 accident at the Mina Al-Ahmadi Refinery, Kuwait’s refining capacity fell by about 450,000 barrels per day (bpd) from 900,000 bpd before the accident. Capacity was gradually restored to 750,000 bpd by the middle of 2001 with one crude distillation unit at Mina Al-Ahmadi Refinery still under repair. Production during 2001 was 11% lower than in 2000 at 655,000 bpd. In addition to this decline, Kuwait’s refining margin, the premium received for refined products over the price of crude oil, dropped by 33% from $ 4.5 per barrel to $ 3.
$ 182 M compensation sanctioned for Kuwaitis:
The Kuwaiti Press has reported that the United Nations Panel overseeing compensation to victims of Iraq’s 1990 invasion of Kuwait has approved $ 182 Million in the latest installment of claims for losses and damages. Most of the money will go to Kuwaiti individuals and the rest to other individuals and companies.
So far the Commission has handed over to Governments and International Organizations more than $ 16 Billion to distribution to claimants.
US Embassy’s warning to US Citizens in Kuwait
According to press reports, the US Embassy in Kuwait has warned the American Citizens to avoid apartment buildings and public places where Westerners gather, after security incidents at one apartment complex.
The Embassy said that the warning was prompted by two recent incidents at an apartment complex in Kuwait with a high number of American residents. It gave no further details.
KPC signs contract with Indian Company
Kuwait Petroleum Corporation (KPC) signed a contract with Haldia Petrochemicals Company, India to supply Naftha, as part of a plan to expand KPC activities in strategic markets and its direct dealing with consumers.
KPC has expanded its activities in the Asian markets, by signing this contract, since this company is one of the most important petrochemical companies in India. KPC wants to reinforce their presence in the growing strategic markets like India, which is witnessing a constant demand for Kuwaiti crude and its derivatives.
OPEC’s plan to trim oil production
In an unusual decision aimed at keeping crude prices from falling, OPEC agreed to increase its official target for oil output as part of a plan to cut its actual production by the time seasonal demand dips early next year. This decision will lead to a net reduction of 1.5 million to 1.7 million barrels a day in OPEC’s actual output. To achieve that goal will take a counterintuitive approach of raising its production target in hopes that the member countries that have been exceeding the current quotas would adhere more strictly to the new higher quotas. The pact is expected to have little impact on consumers. Analysts estimate that OPEC is producing as much as 3 million barrels a day above its existing target of 21.7 million barrels.
Iraq submits voluminous report on weapon capabilities
Iraq has submitted a 12,000-page dossier on its weapon capabilities as required by the latest UN Resolution, one day prior to the deadline fixed by the United Nations. The analysis of this report will decide whether there could be a war against Iraq or not. However, mobilization of troops by the United States is going on. It is reported in some media that even the United Kingdom is mobilizing for a possible war.
Kuwait Currency
Kuwaiti Dinar has been linked with US Dollar. So far, since the independence of the Country, the Kuwaiti Dinar was a floating against a basket of currencies. Now, the Government of Kuwait has decided to link it only with US Dollars at a ratio of 1 US Dollar = Kuwaiti Dinars 0.303. All other Gulf Co-operation Council (GCC) Countries have already linked their currencies to US Dollar. This paves the way for a long-cherished desire of the GCC countries to have one unified currency like the Euro.
