Kuwait Records a Fiscal Deficit of 7.14 Billion Dinars as Oil Revenue Falls Nearly 30 Percent
Kuwait recorded an actual fiscal deficit of 7.14 billion dinars, about 23 billion dollars, in fiscal year 2025/2026, as a sharp fall in oil revenue outweighed a modest improvement in non oil receipts and kept public finances under pressure.
The deficit widened from about 1.06 billion dinars in the previous fiscal year, a rise the Ministry of Finance put at 576.2 percent, and the composition of the swing shows it reflects the scale of the revenue shock rather than a broad surge in expenditure. Total actual revenue fell 25.4 percent to 16.45 billion dinars, while actual expenditure rose just 2.1 percent to 23.6 billion dinars.
Oil was the decisive factor. Actual oil revenue dropped 29.8 percent to 13.6 billion dinars, about 44 billion dollars, compared with the previous fiscal year, a year in which production was disrupted by the regional conflict and crude prices softened. Non oil revenue rose 6.3 percent to 2.9 billion dinars, about 9.4 billion dollars, but the increase was far too small to offset the fall in oil receipts. Oil still accounted for roughly 83 percent of total revenue, underlining how directly Kuwait’s public finances track crude prices and production volumes.
The final account also came in wider than planned, and the arithmetic shows where the miss occurred. Kuwait’s budget for the year had projected revenue of 18.23 billion dinars, expenditure of 24.54 billion and a deficit of 6.31 billion. The final deficit of 7.14 billion dinars therefore exceeded the approved estimate by about 833 million dinars, or roughly 13.2 percent. Revenue explains the overshoot: actual receipts came in about 1.78 billion dinars below budget, a shortfall of nearly 9.8 percent, with oil revenue about 1.71 billion dinars below the budgeted 15.31 billion. Spending, by contrast, came in about 938 million dinars below its allocation. Restraint on the expenditure side helped, but it could not absorb an oil revenue decline of that scale.
The structure of spending shows why. Salaries and support spending reached 19.2 billion dinars, or 81.5 percent of total actual expenditure, with subsidies alone amounting to 4.2 billion dinars and capital expenditure at 1.7 billion. Set against that base, non oil revenue of 2.9 billion dinars covers only about 12 percent of total spending and around 15 percent of the wages and subsidies bill, our calculation, which is the clearest illustration of why non oil revenue development sits at the centre of the fiscal reform agenda.
The comparison with the previous final account highlights the speed of the swing. In fiscal year 2024/2025, Kuwait recorded total revenue of 22.06 billion dinars, oil revenue of 19.36 billion, expenditure of 23.11 billion and a deficit of about 1.06 billion. The deficit therefore widened by about 6.08 billion dinars year on year, with the drop in oil revenue explaining almost the entire deterioration.
The current fiscal year is budgeted on similarly conservative assumptions. The 2026/2027 budget is built on an oil price assumption of 57 dollars a barrel and estimates revenue at 16.31 billion dinars, expenditure at 26.07 billion and a deficit of 9.76 billion. Compared with the latest actual outcome, the new budget points to broadly flat revenue, higher expenditure and a larger planned deficit, though the revenue side carries upside if oil prices hold above the assumption and production continues to recover, with Kuwait’s output allocation rising to 2.66 million barrels a day in August under the OPEC+ agreement.
Why it matters: The final account is a clean demonstration of how quickly a hydrocarbon exporter’s fiscal position can swing when oil revenue weakens, even with spending growth held to 2 percent. For Kuwait, the immediate issue is not solvency: the country retains large sovereign assets and external buffers, and its spending discipline against budget shows real control. The issue is structure. The IMF’s latest Article IV consultation flagged the fiscal exposure to oil and called for stronger non oil revenue mobilisation, wage bill reform, better targeted subsidies and a medium term fiscal framework. The 6.3 percent rise in non oil revenue is a step in the right direction, but at 2.9 billion dinars against a 23.6 billion dinar spending base, the diversification task remains the defining one for Kuwait’s public finances, and the recovery in oil volumes now under way will do more for the near term balance than any other single variable.
Outlook: The markers to watch are oil prices against the 57 dollar budget assumption, the pace at which Kuwait’s production recovers toward its rising OPEC+ allocations, the financing mix chosen for the larger planned deficit, and progress on the non oil revenue measures the reform agenda envisages. A year of restored production volumes and firmer prices would narrow the gap quickly, which is precisely the sensitivity the final account exposes in both directions.
Key figures
| Indicator | FY2025/26 actual | Change |
| Fiscal deficit | KD 7.14 billion | +576.2 percent YoY |
| Total revenue | KD 16.45 billion | -25.4 percent YoY |
| Oil revenue | KD 13.6 billion | -29.8 percent YoY |
| Non-oil revenue | KD 2.9 billion | +6.3 percent YoY |
| Total expenditure | KD 23.6 billion | +2.1 percent YoY |
| Wages and subsidies | KD 19.2 billion | 81.5 percent of spending |
| Subsidies | KD 4.2 billion | 17.8 percent of spending |
| Capital expenditure | KD 1.7 billion | 7.2 percent of spending |
Sources: Ministry of Finance; International Monetary Fund.
