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Sun 22 Feb 2009 12:56 PM

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Kuwait's CBK urges further interest rate cut - paper

Lower debt service burden to aid finance firms - Commercial Bank of Kuwait .

Commercial Bank of Kuwait urged the Gulf state's central bank to further reduce interest rates to help shore up the economy, a newspaper quoted the bank's chief executive as saying on Sunday.

Kuwait last lowered its benchmark discount rate by 50 basis points to 3.75 percent in December and has slashed the rate by 200 basis points since October.

"The central bank should take a step towards reducing the interest rate ... according to the current circumstances, which will reflect positively on the economy," CBK Chief Executive Jamal Al Mutawa said, according to Al Wasat.

"The (cut) would take away the biggest burden firms suffer from, which is the debt service," he said. CBK could not be reached to confirm the remarks.

Several Kuwaiti investment firms have been struggling to refinance debt because banks have been reluctant to lend.

The central bank governor said earlier this month the country's key discount rate was at an "appropriate" level.

Sheikh Salem Abdul-Aziz al Sabah told state news agency KUNA on Saturday a 1.5 billion dinar ($5.09 billion) stimulus package still awaiting parliamentary approval should be adopted to help the Gulf state face global financial turmoil.

The plan would see Kuwait guarantee half of all loans local banks provide to investment firms looking to refinance debts. (Reuters)

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