Kuwait’s government is considering to set up a multi-billion bailout fund to help troubled firms in light of the global financial crisis, several newspapers said on Tuesday.
The cabinet discussed on Monday a new package of measures to boost the economy and has agreed to set up a 5-billion-dinar ($17.32 billion) fund to buy assets from firms while giving them the option of buying these assets back at the same price, Al Watan newspaper said in an unsourced report.
Several other newspapers carried similar reports citing unidentified government sources who said final approval was still pending and would be based on a report by the government’s economic and legal committees due next week.
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 sources told Reuters last week 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 cabinet did not mention the reported fund in a statement after its weekly meeting on Monday when it discussed a package of measures presented by the central bank governor to strengthen the oil-exporter’s financial and banking sectors, saying only that it had appointed two committees to examine it further.
The central bank-devised rescue plan, which is expected to be referred to parliament for approval next month, includes measures to ensure deposits and guarantee special loans in local banks, Watan said.
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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