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Kuwait Cabinet sanctions economic stimulus plan
Outgoing Kuwait Cabinet, today approved a multi-billion dollar economic stimulus plan to underwrite fresh bank loans, and to assist distressed investment firms, the Finance Minister Mustafa al-Shamali, has announced.
The Stimulus plan, which was halted for nearly two months now, will be passed as a decree by the Emir, who last week, dissolved the Parliament. The package would be implemented immediately, but as per the Kuwaiti Law, it will be officially submitted to the Parliament after the new house has been elected in two months time. The new Parliament will have the power to approve or reject it.
As per the currently approved legislation, the State would guarantee 50 percent of an estimated four billion dinars (13.8billion dollars) of new credit facilities, which the Banks could grant to the local companies in 2009 and 2010.
The Governor of Central Bank of Kuwait, Sheikh Salem Abdulaziz al-Sabah, when speaking about the plan, mentioned that this plan would encourage Banks to go ahead and offer fresh credit to companies which have been so far struggling to obtain new finance, owing to the global economic crisis.
The investment firms which have been suffering due to lack of liquidity can now use the new credit to repay part of their debt to foreign banks and financial institutions, as per the legislation.
The 99 investment firms in Kuwait had so far accumulated a debt close to five billion dinars (17.3bn dollars), out of which 7.6 billion dollars belonged to foreign banks and financial institutions.
Several Kuwaiti investment companies have defaulted on loans, as credit facilities have been difficult to obtain, while the value of their assets saw a steep decline.
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