By Courtney Trenwith
Kuwait will take on the loans taken out by nationals in the lead up to global financial crisis
Oil-rich Kuwait will bail out billions of dollars worth of bank loans taken out by nationals in the lead up to the global financial crisis.
The government reached a provisional agreement on Tuesday to buy all bank loans taken out by Kuwaiti citizens between January 1, 2002 and March 30, 2008 and reschedule them interest free.
The new repayments would not exceed 40 percent of a borrowers monthly income, financial and economic affairs committee chairman Yussef al-Zalzalah said, according to news agency AFP.
The bailout is expected to cost the government US$3.2 billion and benefit 66,000 debtors with as much as US$20 billion in debt owed, according to AFP.
MPs claim banks violated lending rules during the period by charging higher interest and the Central Bank of Kuwait failed to apply the law.
Parliament is still considering a parallel proposal to give 1000 dinars (US$3500) to Kuwaitis who will not benefit from the scheme, which could cost an additional US$1.2 billion.
Finance Minister Mustafa al-Shamali had opposed previous proposed relief schemes, claiming they were unconstitutional and would encourage people to spend lavishly.
The government rejected a similar bill passed by parliament in January 2010, when the debt was worth at least $21.6 billion and the interest $5.2 billion.
The change in government position came amid a bitter political dispute in the emirate and after the election of a pro-government parliament in a December poll boycotted by the opposition, which has staged several street protests.
After this, they can bail out their national carrier, Kuwait Airways, and pay the staff next month.
what an absolute waste of time the message is borrow high and foolish and the government will bail you out thus setting a bad example as they will go and borrow again
this has happened several times in recent yrs and we still have the issue ie high loans so much for sharia finance as most are interest bearing loans what about proper checks to avoid the debt in the first place irrisponsible lenders
they they talk about taxes for expats so were penalised for Kuwaiti mistakes when in fact we create the wealth for them
a stupid idea and dangerous as it increases inflation
you dont deserve pay your service is poor too highly staffed and expensive flights
your never on time and need to live in a commercial world you have over 4000 staff for 20 planes why BA or any other airline have one tenth of it
a bloated organisation with poor management and losing money in a real world you would have gone bankrupt years ago
aaahh where would our poor Kuwaiti cousins be without their nanny state to look after them. There, there. Coochy coo.