‘Future Fund’ assets $261bn Surplus at $52bn

KUWAIT CITY, Jan 13, (RTRS): A rainy day fund managed by Kuwait Investment Authority (KIA) had assets currently worth more than $261 billion at the end of March last year, a local newspaper reported on Sunday citing a government audit.

Kuwait, one of the world’s richest countries per capita, puts a percentage of its annual revenues into the Future Generations Fund, a nest egg for when oil supplies diminish or for when the economy suffers other shocks.

Daily al-Qabas said 47 percent of the fund was invested in stocks and that its total size was 73.63 billion Kuwaiti dinars ($261.61 billion) at the end of March. This would be $261.47 billion according to the current exchange rate or $266 billion at the time.

The KIA, which does not officially disclose its assets under management, was not immediately available for comment.

In September last year, OPEC member Kuwait decided it would start putting 25 percent of revenues into the fund, up from 10 percent previously, in order to invest state money more efficiently.

The fund, which invests outside Kuwait, was set up in 1976 and all investment income is reinvested. It is meant to provide for future generations in a country where more than half of nationals are under 25.
The KIA also manages a large General Reserve Fund which acts as the main treasurer for the government and receives all revenues.

Meanwhile, Kuwait’s government budget surplus stood at 14.7 billion dinars ($52 billion) in the first eight months of its fiscal year thanks to strong oil revenues, data from the finance ministry showed.

The April-November surplus accounts for around 33.1 percent of the 2011 gross domestic product, according to a Reuters calculation based on the latest official data.

A Reuters poll in September forecast Kuwait would record a budget surplus of 23.8 percent of GDP in fiscal year 2012/13, which began in April.

Total revenue was 21.6 billion dinars while spending reached a mere 6.9 billion dinars, around a third of the 21.2 billion dinar total projected for the year. Kuwait had originally wanted to spend 14.2 billion dinars by November, the data showed.

The surplus is already larger than the figure for full year 2011/2012, when Kuwait booked a record 13.2 billion dinar surplus thanks to robust oil income and lower spending.

Receipts from crude exports account for around 95 percent of the government’s income. Kuwait’s cabinet approved a revised budget for the current fiscal year in October.

While its fiscal position is strong, political upheaval in the state has stalled implementation of major parts of a 30 billion dinar ($107 billion) economic development plan announced in late 2010.

Analysts say Kuwait needs to diversify its oil-reliant economy and control wage growth.

As part of plans to invest revenues more efficiently, authorities decided to increase the amount channelled into Kuwait’s Future Generations Fund, a nest egg for when oil supplies diminish or for when the economy suffers other shocks.




 

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