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Law may help achieve financial stability
A senior Kuwaiti official on Monday said that a regulation to achieve financial stability in the country would be a precautionary measure to deal with international economic meltdown.
The Governor Sheikh Salem Abdulaziz Al-Sabah when speaking to KUNA said that the entire law reflects an objective assessment of the nature of challenges confronting the local financial and banking sector, and the national economy on the whole.
Although the regulation represents a comprehensive program to strengthen the financial stability of the state, it is based on three basic axes which acts like a precautionary measure to deal with global financial turmoil, the stimulating aspects for national economy and the remedial aspects for cases dictated by global meltdown.
Part of the law aim to keep the Kuwaiti banks away from negative impacts on the value of their assets. This includes the coverage by state if possible and any deficit that the bank may face regarding funds allocated to the credit facilitations portfolio and real estate portfolios that may be encountered.
According to the CBK governor such a measure would protect banks from any repercussions of the global economic crisis. The second part of the law states a 50 percent state coverage of new financing offered by Kuwaiti banks to all companies, individuals and clients at a maximum of KD4billion during 2009 and 2010.
The law also aims to help investment firms in dealing with their financial problems, particularly the sudden halt of external financing lines and the plunge in value of property and financial assets.
Such a stage requires extensive effort for economic diversification and promotes investors to increase their activities in several fields through drafting several economic policies.
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