We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Mon 26 Jan 2009 03:30 PM

Font Size

- Aa +

Kuwaiti gov't under pressure to ease financial crisis

Gulf state's lawmakers urge government to raise spending and soften crisis's impact.

Kuwaiti lawmakers are piling pressure on the government to increase spending to soften the impact of the global financial crisis that is being felt in the Gulf Arab state despite its enormous oil wealth.The cabinet of the Organisation of the Petroleum Exporting Countries (OPEC) member is due to meet on Monday to discuss a new package of measures to strengthen Kuwait's financial sector after it had to rescue its fourth-largest lender, Gulf Bank.

Kuwait has already guaranteed bank deposits to boost confidence and allowed its sovereign wealth fund the Kuwait Investment Authority (KIA) to pump more cash into the bourse, which fell 38 percent in 2008.

Pressure is mounting on the government to do more to help other troubled financial firms after Kuwait's largest investment bank, Global Investment House, said earlier this month that it had defaulted on most of its debt and Investment Dar said it needed loans of up to $1 billion to refinance debt.

Liberal MP Mohammad al-Abdul-Jader said around 15 deputies would present a request during Tuesday's parliamentary session for a special session to discuss the financial crisis.

"We will demand the government to come up with legislation to deal with the financial crisis," he said.

Independent MP Marzouq al-Ghanim walked out of a government briefing to parliament's financial committee on Sunday, saying nothing concrete had been presented by the finance minister and central bank governor.

"We started suspecting that the government is doing it on purpose, as if the government wants to play the role of the spectator during a financial collapse," he said.

The parliament has a history of challenging the government and has, in the past, pushed for the resignation of ministers. The last cabinet stepped down in November amid intense parliamentary pressure.

The persistent standoff between the legislative and executive branches has delayed key legislation such as the launch of a stock market regulator for the Arab world's second-largest bourse.

Under a central bank plan, which will need approval by parliament, the government now wants to offer financing to help strengthen the banking sector and investment firms, according to a copy of the government report obtained by Reuters.

"This includes measures to present some necessary financing to help the economic units in all sectors and deal with the financial turmoil at some local investment firms," it said in the report without elaborating.

Beyond measures to shore up the financial sector, some lawmakers are now also calling on the government to buy up the private debt of nationals who lost money on the stock market.

"Buying citizens' loans is an important and essential step to resolve the financial crisis and revive the Kuwaiti economy," said parliament member Fahd al-Mee.

In 2007, Kuwait set up a 300 million dinar ($1.03 billion) fund to help nationals struggling to pay off debt after lawmakers pressured the government to bail out borrowers.

MP Nasser al-Duwailah agreed: "Parliament is really disappointed with the government's delay... The government took enough time to present solutions but unfortunately it has not presented anything yet." (Reuters)

Arabian Business: why we're going behind a paywall

Real news, real analysis and real insight have real value – especially at a time like this. Unlimited access ArabianBusiness.com can be unlocked for as little as $4.75 per month. Click here for more details.