The plan came after investment firms said they were unable to obtain fresh loans to continue their business during the global crisis. Parliament is expected to debate the plan on March 3. Several deputies have urged the government to bail out indebted citizens, who have been hit hard by a sharp stock market decline. Five MPs have proposed a bill to buy citizens’ loans valued at around 2.2 billion dinars, said Islamist MP Daifallah Buramya.
We think that this bill will help revive the economy," he asserted, adding that about 30 MPs might support the bill. "Buying citizens’ debt is a big part of the solution as it would…support all sectors of the economy," said fellow Islamist MP Ali Al-Deqbasy.
On Sunday, Central Bank Governor Sheikh Salem Abdulaziz Al-Sabah said he expected local banks to provide loans to companies worth up to KD 4 billion this year and next under the new rescue plan, of which Kuwait would guarantee 50 percent. "If the government is protecting the wealth of merchants, we also have to care about the woes of Kuwaiti citizens," said MP Saad Al-Khanfour.
Abdulwahed Al-Awadhi, the head of the parliamentary finance committee, disagreed, insisting that parliament should instead focus on the proposed rescue package. "I hope that we [MPs] will concentrate on the bill, which will strengthen financial stability in Kuwait especially under the current economic circumstances," he stated.
The government has been under increasing pressure to support troubled investment firms, which make up more than half of the country’s listed companies. Global Investment House said that it defaulted on most on its debt last month, while Investment Dar has said it is seeking up to $ 1 billion in loans to refinance its debt. Kuwait’s parliament has a history of challenging the nation’s government, unusual in a region of autocratic rulers.
Debt write-off became a hot political issue after MPs in 2007 pushed through a KD 300 million state fund to help citizens settle debts. The government has tried to end a costly nanny state tradition, which has led some citizens to take out large loans in the hope of write-offs. The state wrote off all consumer loans after the 1991 Gulf War. It also wrote off debts in a plan to settle $ 20 billion in bad loans after a 1982 bourse crash.
