By Joanna Hartley
The $5.17bn economic package, stalled for 2 months, will assist struggling companies.
A long-awaited $5.17bn stimulus package was finally put into effect in Kuwait on Monday in an attempt to shore up the economy amid the global financial crisis.
The bill was stalled for two months while MPs in the Gulf state’s parliament wrangled over the details of its implementation – resulting in a stand-off that eventually saw the assembly being dissolved late-March.
However, under by-laws that formed part of a decree issued by the out-going cabinet last month, legislation for the package is now effective, according to a report in Kuwait daily the Kuwait Times.
The money is aimed at assisting troubled investment firms, some of which have already defaulted on debt, and to encourage banks to offer new credit.
Under the bill’s terms the state will guarantee 50 percent of an estimated KD4bn ($13.8bn) of new credit facilities to be granted by banks to local companies during the next two years.
It also provides 15-year guarantees against any drop in the value of local banks' investment and real estate portfolios and old loans to local companies.
Kuwait Investment Authority, the state's sovereign wealth fund, is also permitted to buy into new capital if shareholders are unable to fully subscribe to teh required capital increases of listed firms or banks.