Kuwait's Fiscal Year: Exceeding Oil Revenue Expectations | Kanebridge News
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Kuwait’s Fiscal Year: Exceeding Oil Revenue Expectations

The closure of Kuwait’s 2023/2024 fiscal year marked a significant achievement, with oil revenues surpassing expectations.

Tue, Apr 9, 2024 4:50pmGrey Clock 2 min

According to the Al-Shall weekly report, the state’s budgeted expenditures were around 26.32 billion dinars, with total revenues estimated at 19.46 billion dinars. Oil and gas revenues were a major contributor, accounting for approximately 88.2% of total revenues, or about 17.16 billion dinars. The report underscored the delay typically seen in final account actual results, emphasizing their critical importance for fiscal assessment.

Oil Revenue Performance and Market Dynamics

The average price for a barrel of Kuwaiti oil in March 2024 was noted at $84.4, significantly over the budgeted forecast of $70 per barrel by $14.4 or 20.6%. This average price, however, fell by 13.1% compared to the previous fiscal year’s average of $97.1 per barrel.

The reduction in production, as per the “OPEC+” agreements, saw Kuwait’s oil output stabilizing at 2.41 million barrels per day from January 1, 2024, about 9.8% less than budgeted figures.

Al-Shall projected Kuwait‘s oil revenues for the fiscal year to be around 21.28 billion dinars, surpassing budget estimates by approximately 24%, leading to total expected revenues nearing 23.58 billion dinars. This projection, however, indicated a potential deficit against the expenditure allocations, highlighting the need for fiscal adjustment.

Banking Sector Growth

The Kuwaiti banking sector witnessed considerable growth in net profits for the year 2023, achieving approximately 1.53 billion dinars, a 30.4% increase from 2022. This growth occurred despite a downturn in profits during the fourth quarter compared to the same period in 2022.

The report detailed that traditional banks constituted 54.2% of the total net profits, with Islamic banks contributing the remaining 45.8%. Significant profitability improvements were observed, including enhancements in return on total assets and equity.

The banking sector’s price-to-earnings ratio also saw a decrease, further illustrating the sector’s robust performance. Notably, Kuwait Finance House and the National Bank of Kuwait were prominent contributors to the sector’s profits.

Principles Behind Oil Revenue Estimations

Al-Shall’s methodology for estimating oil revenues was based on several key principles: a daily crude oil production share of 2.67 million barrels, a benchmark price of $70 per barrel, and an approved exchange rate of 304 fils to the dollar. Additionally, gas revenues and production costs were meticulously calculated, providing a comprehensive financial overview for the fiscal year.

Commercial Bank of Kuwait’s Performance Metrics

The Commercial Bank of Kuwait showcased remarkable progress in its financial indicators for the year ending December 31, 2023. Notable increases were seen in return on average assets, equity, and capital, alongside a significant rise in earnings per share and an improved price-to-earnings ratio.

These advancements reflect the bank’s enhanced profitability and value proposition to shareholders, underpinning a successful fiscal year for Kuwait’s banking sector and the economy at large.



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Preparatory Work for UAE to Oman Hafeet Rail Project Commences at Full Speed

Preparations have begun on the transformative UAE to Oman Hafeet Rail network, revealing significant construction details during a site visit.

Thu, May 16, 2024 3 min

The $3bn Hafeet Rail project between the UAE and Oman will feature 60 bridges and a 2.5km tunnel, making it an “architectural and engineering marvel,” according to CEO Ahmed Al Musawa Al Hashemi.

Hafeet Rail has announced that preparatory work is moving full speed ahead for constructing the transformative railway link between the UAE and Oman. This announcement was made during a site visit attended by key officials, members of the Asyad and Hafeet Rail executive management teams, project contractors, and consultants.

Key Highlights

During the visit, attendees were introduced to the main components of the project, including passenger, repair, and shipping stations, as well as major bridges and tunnel sites.

The Hafeet Rail project is set to play a very important role in enhancing local and regional trade, unlocking new opportunities in the infrastructure, transportation, and logistics sectors, and fostering economic diversification. It will also strengthen bilateral relations between the UAE and Oman.

The project will involve constructing 60 bridges, some reaching heights of up to 34 meters, and tunnels extending 2.5 kilometres. The Hafeet Rail team showcased the latest rail technologies and innovative engineering and architectural solutions designed to navigate the challenging geographical terrain and weather conditions while maintaining high standards of efficiency and safety.

The rail network will boost various industrial sectors and economic activities and significantly impact the tourism industry by facilitating easier and faster travel between the two countries.

Ahmed Al Bulushi, Asyad Group Chief Executive Asset, noted that the project’s rapid progress reflects the commitment of the UAE and Oman to developing and realizing the project’s multifaceted benefits.

Investment and Future Impact

Al Bulushi added that investments in developing local capabilities and expertise in rail-related disciplines over recent years have enabled the project to reach the implementation phase successfully under the leadership of highly efficient and professional national talent.

Hafeet Rail’s CEO Ahmed Al Musawa Al Hashemi emphasized, “The commencement of preparatory works for construction is a testament to the robust synergy between all parties involved in both nations, achieving this milestone in record time. We are confidently laying down the right tracks thanks to the shareholders of Hafeet Rail and the expertise of local companies in Oman and the UAE, alongside international partners.”

During the site visit, the visitors explored some of the key preparatory sites, including Wadi Al Jizi, where a 700-meter-long bridge towering 34 meters will be constructed. This ambitious project is envisioned as an architectural and engineering marvel in a complex geographical landscape.

Future phases will require more collaboration, with a continued focus on quality, safety, and environmental considerations in line with the international industry best practices.

The Hafeet Rail project represents the first-of-its-kind railway network linking two Gulf nations, marking a significant shift in regional goods transportation. This efficient and reliable transportation option will reduce dependence on slower and less sustainable road transport.

Hafeet Rail promises a 40% reduction in shipping costs and a 50% in transit times compared to traditional land transportation methods, as it will be connecting five major ports and several industrial and free zones in both countries.

This shift will reduce reliance on road transport by cars and trucks and promote more sustainable shipping practices. The establishment of the railway network will also create significant opportunities for SMEs in construction, engineering, and logistics support, acting as a catalyst for economic growth and innovation within the domestic economy.

By linking major ports, the Hafeet Rail project will enable local SMEs to import, export, and distribute their products more effectively, enhancing their market reach and global competitiveness.

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