First Published: 2013-03-19

 

Kuwait parliament passes in principle controversial law to bail out debtors

 

Finance Minister says cost of bailout under law is ‘unknown and it could be between $3.5 billion and $14 billion’.

 

Middle East Online

By Omar Hasan - KUWAIT CITY

‘Issue is not technical only but also political’

Kuwait's parliament on Tuesday passed in principle a bill that requires the government to buy billions of dollars of bank loans owed by citizens and reschedule them after waiving interest.

Thirty-three MPs voted for the law, three opposed it while 20 members including all cabinet ministers present abstained.

To become effective, the law must pass another round of voting in parliament in the coming few weeks, approved by the government and then signed into legislation by the ruler of the oil-rich Gulf state.

The government expressed reservations at the law with State Minister for Cabinet Affairs Sheikh Mohammad Abdullah Al-Sabah saying "the law requires fundamental amendments" to be acceptable.

"The government rejects the law in its current form but will abstain from voting as a sign of cooperation," he told the house just before the vote.

Finance Minister Mustafa al-Shamali said the cost of the bailout under the law is "unknown and it could be between 1.0 billion dinars ($3.5 billion) and 4.0 billion dinars ($14 billion)."

Head of parliament's financial and economic affairs committee MP Yussef al-Zalzalah said the cost to be borne by public funds is around 930 million dinars ($3.3 billion).

Under the law, the government will purchase all loans taken by Kuwaiti citizens before March 30, 2008 from conventional and Islamic banks and financial companies.

The government will then waive all interest and reschedule repayment over a period not exceeding 15 years provided that the instalment will not be higher than 40 percent of the debtors' income.

Based on the bill, at least 66,000 Kuwaiti borrowers will benefit from the bail out which does not cover expatriates.

During the four-hour debate, several MPs strongly blasted banks for causing the problem by illegally charging high interest on loans and demanded penalising banks by forcing them to refund the extra interest charged.

"What the banks did before 2008 was a clear robbery of people money," Islamist MP Khaled al-Adwah said.

Independent MP Salah al-Atiqi however charged that MPs were approving the law for political reasons.

"The story began with election promises by some candidates. There is no real debt problem and no country in the world has written off loans or interest. Waiving interest could trigger a collapse in the credit system or cause a financial catastrophe," Atiqi said.

MPs have also proposed that every Kuwaiti who does not benefit from the debt relief scheme should be given a grant of 1,000 dinars ($3,500). Native Kuwaitis number 1.2 million.

The government had rejected a similar bill passed overwhelmingly by parliament in January 2010. At that time, the size of debt stood at around $21.6 billion and the interest at $5.2 billion.

The change in government position came amid a bitter political dispute in the emirate and after the election of a pro-government parliament in a December poll boycotted by the opposition, which has staged several street protests.

"The issue is not technical only but also political. Let's give something to the people ... There are people out there who do not want this parliament to continue," parliament speaker Ali al-Rashed said during the debate.

OPEC member Kuwait holds assets estimated at $400 billion, mostly invested abroad, amassed during the past 13 years on the back of high oil prices.

 

Turkey warns Syria against protecting Kurds

Two hardline Syria rebels announce merger

IS kills 25 Iraqi militiamen near Kirkuk

Sudan frees dozens of activists detained after protests

Saudi Arabia to host first Arab Fashion Week

Somalia appoints new police, intelligence chiefs

Iran plane crash rescue search halted for second night

France reaffirms commitment to Iran nuclear deal

Abbas warms up to Moscow amid cold US-Palestinian ties

Israel strikes 'historic' gas contract with Egypt

Are Iranian satellite channels aiding regime change?

Israel pounds Gaza with air strikes after rocket attack

Iraq orders deportation of French jihadist

Pro-Assad militias to enter Syria's Afrin

Three Egyptian soldiers killed in Sinai

Israeli, US officials meet over gas row with Lebanon

Iran's supreme leader says progress needed on justice

Syria Kurds claim striking positions in Turkey

Netanyahu warns Iran, brandishes piece of metal

66 feared dead as plane crashes in Iranian mountains

Saudi women to open businesses without male permission

Netanyahu slams 'outrageous' Holocaust remark by Polish PM

Israeli air strikes kill 2 in Gaza

Six suffer breathing difficulties after Turkish shelling in Afrin

Russian mercenaries - a discrete weapon in Syria

Iran protests ban on wrestler who threw bout to avoid Israel

Fears of expanding Syrian war could trigger peace deal

Battle to free Mosul of IS 'intellectual terrorism'

Turkey frees Garman-Turk journalist after one year without charge

Turkey hands life sentences to 3 journalists for Gulen links

Turkey, US agree to ‘work together’ in Syria

Thousands protest corruption in Tel Aviv amid PM indictment call

Prominent jihadist commander killed by rival Syria rebels

300 Russians killed in Syria battle last week

Tillerson, Erdogan have ‘productive, open’ talk

Iran raises rates, freezes accounts in bid to shore up rial

Kremlin says five Russians killed in US Syria strikes

Oman FM in rare visit by Arab official to Jerusalem

Senior IS leader extradited to Iraq from Turkey

Strikes hit another hospital in Syria's Idlib

Churches snub Jerusalem reception over tax dispute with Israeli authorities

Tillerson says US never gave 'heavy arms' to Kurdish YPG

Captured foreign IS suspects claim innocence

Yemeni mother awaits death penalty for spying for UAE

Fuel shortage shuts down Gaza's only power plant