Kuwait’s deficit hits post-covid high as oil revenues collapse

Kuwait’s FY 2025-26 fiscal deficit ballooned to its widest since the covid-19 pandemic, growing 576.2% to KWD 7.1 bn (USD 22.9 bn), or 15% of the country’s GDP, according to the Finance Ministry’s closing accounts (pdf).

While spending was broadly on budget, the deficit grew as revenues collapsed. Total government revenues fell 25% y-o-y — the sharpest drop since FY 2020-21 — almost entirely on oil revenues falling 30% to KWD 13.6 bn (USD 43.8 bn). That’s more than 11% below what the government had initially budgeted for the fiscal year.

Volume vs pricing: Although the realized oil price came in close to budget at USD 69 / bbl, the miss was on volume as Opec+ production pauses in 1Q 2026 and Iran’s closure of the Strait of Hormuz choked export revenues.

The rest of the closing figures show signs of encouraging, albeit slow, reform progress: Non-oil revenues rose 6% y-o-y to record a third consecutive annual gain, supported by higher fees and property rents. A white-lands tax and a 15% corporate income tax on multinationals are both due to show up in the country’s FY 2026-27 balance. Overall spending rose a modest 2.1% y-o-y, suppressed by an 8% cut in subsidies as oil prices softened, while capex rose 17% y-o-y to KWD 1.8 bn (USD 5.8 bn) in a sign of reviving project activity.