Kuwait on Monday projected a 4.7 per cent rise in spending to 22.5 billion dinars ($271.59 billion) as part of its state budget for the year ending on March 31, 2020, as the major oil producer seeks to spur economic growth.

The Kuwaiti Finance Minister Nayef Al Hajraf said he expected the average oil price to range between $55 (Dh202) to $65 per barrel, higher than the projected $50 a barrel in its last budget.

Brent crude oil futures traded around $63 on Monday.

Kuwait said the new plan aims to drive economic growth by maintaining a capital expenditure ratio of 17 per cent of the budget, in line with last year’s figures, while tightening controls to curb wasteful spending.

Al-Hajraf also promised to continue to gradually introduce fiscal reforms. The budget projects state subsidies of 3.97 billion dinars.

Salaries and subsidies account for 71 per cent of the budget, according to the budget statement.

The budget deficit in the new fiscal year was projected at 7.7 billion dinars after accounting for a deposit of 10 per cent of total revenue into the sovereign wealth fund. The finance ministry said the fiscal deficit is expected to decline by 2.1 per cent compared to current budget figures.

Kuwait’s finance minister said the deficit will be totally covered by general state reserves.

The state transfers 10 per cent of total annual revenue to the Future Generations Fund, which is managed by the Kuwait Investment Authority (KIA).

KIA, a major global investor, manages about $592 billion in assets, according to the Sovereign Wealth Fund Institute, which ranks it the world’s fourth-biggest sovereign wealth fund.

The state’s budget projected 16.3 billion dinars in revenue, with non-oil revenue expected to rise by 5.4 per cent compared to the current year’s budget.

It did not provide revenue figures for the current fiscal year. The fiscal 2018/19 budget had projected a revenue of 15 billion dinars.