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To bail out Kuwaitis, or not?

To bail out Kuwaitis, or not?

The debt debate rages on in Kuwait.

November 18, 2009 2:04 by



In the past, the Kuwaiti government had no problems bailing out its debt-burdened citizens. But its recent reluctance to purchase customer loans has caused a parliamentary stir, bringing to surface a debate on what some have called “a waste of public money,” The National reported.

In early 2008, the Kuwaiti government interfered with the creation of the Debt-Relief Fund with a capital of KD500 million ($1.75 billion), managed by the Ministry of Finance. The fund is meant to pay off consumer debts, in installments to banks and investment companies, which practice their business under the supervision of the Central Bank of Kuwait.

Yesterday the Kuwaiti Assembly witnessed heated discussions when the parliament supported a request by the financial committee to delay the loans debate until December 23 – a demand that some MPs have been trying to push for months now. Thirty-three MPs supported the delay, while 31 opposed it.

Supporters of the delay say that a decision cannot be made without detailed figures including the expected cost on public funds, while opponents argue that the delay is an attempt by the financial committee and the government to postpone a solution to the problem that has had a severe impact on thousands of families in the country.

Ali al-Daqbasi, an MP, said in parliament: “According to a consultant at the ministry of justice, Ali al-Zubaibi, there are 63,000 citizens who have a court case [because of debt], and we have been looking for a solution for three years … If the issue is not solved it will be a social disaster.”



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1 Comment

  1. Dismanirie on November 19, 2009 6:58 am

    Kuwait has a history of debt forgiveness which encourages excess borrowing, and lenders themselves throw caution to the winds because they are relatively certain that the state will become lender of last resort and cover their ill-judged loans.

    Unless Kuwaiti consumers learn fiscal prudence (and the banks are made to bleed for their lax approach to lending criteria) they will continue to overborrow.

    Of course there are genuine cases of hardship, but it is the court’s duty to determine the ability of the borrower to repay the money, not that of the Ministry of Finance.

    There should be no forgiveness of consumer debt! It is a disastrous lesson to teach the next generation.

     

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