Kuwait central bank to unveil economic plan

Kuwait's central bank is to present a plan on Monday to further shore up the economy.
Kuwait central bank to unveil economic plan
By Jason Benham
Sat 24 Jan 2009 09:35 PM

Kuwait's central bank is to present a plan on Monday to further shore up the economy and banking sector in the face of the global financial crisis, its governor said on Saturday.Sheikh Salem Abdul-Aziz al-Sabah told the state news agency KUNA that the plan aimed to ensure the protection of financial institutions, expressing confidence in the soundness of the economy. He did not give details of the plans.

Executives and a government source said this week that the government was facing increasing calls to support troubled investment firms, which make up more than half of the country's listed companies and have borrowed heavily from banks as they expanded rapidly during an oil boom in the past few years.

Kuwait's largest investment bank, Global Investment House , shocked the market earlier this month after saying that 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.

In November, Sheikh Salem 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.

Kuwait last year stepped in to rescue Gulf Bank , after it was hit by derivatives losses.

It also guaranteed bank deposits in a bid to boost confidence and allowed its sovereign wealth fund the Kuwait Investment Authority to pump cash into the bourse.

The state has set up a market-maker fund to try to shore up confidence and liquidity in the bourse that has plummeted in recent months as the global crisis hit the Gulf. (Reuters)

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