Register for our free newsletter

 
 
Latest News

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



The total amount of consumer and personal loans is KD6.7 billion ($23.5 billion), including KD1.6 billion ($5.6 billion) of interest.

The recent problem of debts in Kuwait was a result of a number of errors, including the banks’ ill-fated practice of granting loans without considering the volume of their transactions, or looking into customers’ credit histories.

Abbas al-Mejran, the director of the energy and environment at Kuwait University’s economics department told The National that the government’s history of financial support has created a borrowing culture in Kuwait. This brings into question the proposed solution of bailing out debtors. Will bailing out Kuwaitis aggravate Kuwaitis lack of accountability? In other words, would it be a waste of public money to pay off their debts?

Issa al-Quisi, the chairman of the economics department at Kuwait University, told said the government is doing the right thing by not caving into the MPs’ demands to cancel the debt or buy it and reschedule the payments.

“We should build new hospitals, new schools, new roads and new power stations. We shouldn’t just give the money to consumers who will go and borrow money again,” he said. “This is the money of the next generation.”



Pages: 1 2

Tags: , , ,

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.

     

Leave a Comment