Kuwait minister dismisses reports of bailout plan

KUWAIT ECONOMY: Bailout fund not part of economic rescue plan. (Getty Images)

Kuwait’s finance minister denied newspaper reports on Tuesday that the government is considering setting up a multi-billion dinar bailout fund to help troubled firms in light of the global financial crisis.

Several newspapers said earlier the cabinet discussed on Monday a new package of measures to boost the economy and agreed to set up a 5-billion-dinar ($17.32 billion) fund to buy assets from firms.

"No, this is not correct," Finance Minister Mustapha al-Shamali told reporters when asked about the reports. Shamali added that the government was discussing a central bank-devised rescue plan, which is expected to be referred to parliament for approval.

In November, Central Bank Governor Sheikh Salem Abdul-Aziz al-Sabah said the government planned to set up a fund to buy assets at a discount from investment firms and issue them promissory notes enabling them to borrow from banks.

No further details have been made public since but executives and a government source said last week that Kuwait planned to unveil new measures to shore up confidence in the economy, which may include a plan to help investment firms hit by the global crisis repay their debt.

The government is facing increasing calls to support troubled investment and holding firms - more than half of the country's listed companies - which have borrowed heavily to finance expansions during an oil boom in the past few years.

Kuwait's largest investment bank, Global Investment House, said earlier this month it had defaulted on most of its debt, while major Islamic firm Investment Dar has said it needed loans of up to $1 billion to refinance debt. (Reuters)

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