Kuwaiti move to bail out indebted citizens

KUWAIT: A Kuwaiti parliament panel approved writing off interest payments on bank loans taken by nationals over five years, in another attempt by lawmakers to bail out indebted citizens in the oil-rich country.

The finance and economic committee voted in favour of scrapping the interest on loans taken between January 2002 and April 2008, the state-run Kuwait News Agency reported. The committee also approved a proposal granting 1,000 dinars (US$3,550) to each Kuwaiti who hadn’t taken a loan, the agency reported, citing committee member Safaa al-Hashem.

The proposal to write off interest payments, which is opposed by the government, still requires approval of the house. Central Bank governor Mohammed al-Hashel said the interest on loans was an estimated US$6bil, the news agency reported on Jan 13.

Previous attempts at passing such a law have failed. In 2010, the government refused to endorse a bill that would have cost the state about US$23bil to buy personal loans and write off accumulated interest. The government said at the time the measure was unconstitutional and threatened the stability of the country’s banking system. Finance Minister Mustafa al-Shimali has repeatedly said the government had no intention of supporting such proposals.

“Here in Kuwait, the homeland is rights without duties, and the conflict is about bribing the citizen while the economy depends entirely on oil exports, which is a temporary and unstable source,” Kuwait-based AlShall Economic Consultants said in a report on Sunday.

“Any talk about dropping loans or their interest is a call for more borrowing, or a call for abandoning prudence in managing the family or the citizen’s budget. What is spent to finance this proposal is deduction from an asset, and is not the outcome of an economic activity.” –