Kuwait's state budget for next fiscal year envisages a spending increase of about 13 percent from the current year's plan, state news agency KUNA reported Monday as the oil-rich state grappled with a wave of industrial unrest. The budget for the 2012/2013 fiscal year, which starts on April 1, is expected to total around 22 billion dinars ($79 billion), KUNA quoted the head of parliament's budget committee as saying. That estimate assumes revenues of around 14 billion dinars, 12.8 billion dinars of which would come from oil, Adnan Abdulsamad said. The projection is based on an oil price of $65 a barrel, KUNA added. Although the plan assumes a budget deficit, global oil prices are currently trading well above $100, so Kuwait could well post a surplus next fiscal year. For the first nine months of its 2011/12 fiscal year, the government recorded a budget surplus of 13.2 billion dinars. "The government is right to be conservative in terms of its planning. However, the way oil markets look now it seems that oil prices are going to average well over $100 a barrel in the coming months. Despite the spending increase, we do see another large surplus," said Daniel Kaye, senior economist at National Bank of Kuwait. Nevertheless, state finances could come under pressure from wage increases granted because of the industrial unrest, which is partly due to increased union activity since last year's Arab Spring uprisings in the region. State-run Kuwait Airways staff are striking over pay demands and the national carrier was forced to cancel some flights for a third day on Monday. Customs workers started a walkout last week over pay. "What is happening in Kuwait is beyond a state of chaos," the Kuwait Times wrote in a front-page opinion piece. "This time the government has to watch its steps very carefully and take urgent action."
