Drop in oil income widens Kuwait’s budget deficit

Kuwait’s budget deficit widened by 13 percent for the 2025-26 fiscal year, driven by a sharp drop in oil income, according to the finance ministry.

The overall defecit was KD7.1 billion ($23 billion) with revenue nearly 10 percent below its earlier forecast, the ministry said in a statement.

Oil revenue was 11 percent below its estimation. Non-oil revenue also fell short of the budgeted forecast.

Total expenditure fell by almost 4 percent.

Last week the National Bank of Kuwait (NBK) forecast the country’s fiscal deficit would decline to about 3 percent of GDP in 2027-28.

This is due to the introduction of new taxes and the expected resumption of oil exports, which were disrupted by Iran’s closure of the Strait of Hormuz during the conflict in the region.

Experts have forecast that Kuwait’s new levies on multinational companies and a “sin tax” on harmful products could raise nearly $1.5 billion for the government during the 2027-28 fiscal year, starting on April 1 next year.

The finance ministry projected in February a 55 percent increase in the deficit due to an expected fall in oil earnings for the 2026-27 budget.

Further reading:

• Kuwait launches $100m fund to restore war-damaged assets
• Kuwait’s new taxes expected to lift non-oil income to record high
• Kuwait faces energy reckoning after Hormuz crisis