Kuwait MPs demand citizen debt write-offs

KUWAIT DEBT: Lawmakers demand indebted citizens be bailed out. (Getty Images)

Kuwait's government is facing fresh pressure from parliament to boost a $5 billion economic rescue plan, with some lawmakers also demanding a bailout of indebted citizens.

Last week, the cabinet approved a 1.5 billion dinar ($5.1 billion) stimulus package including state guarantees of up to 50 percent for fresh bank loans to companies.

The plan came after investment firms said they were unable to get fresh loans to continue their business during the global crisis. Parliament is expected to debate the plan on March 3.

Several deputies urged the government to bail out indebted citizens, who have been hit by a sharp stock market decline.

Five MPs have proposed a bill to settle consumer loans of citizens valued at around 2.2 billion dinars, Islamist MP Daifallah Bouramia said.

"We think that this bill will help revive the economy," he said, adding that about 30 MPs might support the bill.

"Buying citizens' debt is a big part of the solution as it will ... support all sectors of the economy," Islamist MP Ali al-Deqbasy said.

On Sunday, Central Bank Governor Sheikh Salem Abdul-Aziz said he expected local banks to provide loans to companies worth up to 4 billion dinars 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 woes of Kuwaiti citizens," MP Saad al-Khanfour said.

Abdul-Wahed al-Awadi, head of parliament's finance committee, disagreed; saying parliament should instead focus on the proposed rescue package.

"I hope we (MPs) concentrate on the bill which will strengthen financial stability in Kuwait especially under the current economic circumstances," he said.

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 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.

Debt write-off has been a hot political issue after MPs in 2007 pushed through a 300 million dinar 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 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. (Reuters)

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