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.

 

At least 235 killed in Egypt mosque attack

Saudi Crown Prince calls Iran supreme leader 'new Hitler'

Syrian opposition agrees to send united delegation to Geneva talks

Saudi-led coalition clears passenger flights to Sanaa

Baghdad's Shabandar cafe marks century since opening

Turkey says Trump pledged to stop arming Kurds

Turkey president sues main opposition party leader

Lebanon's Hariri brings status quo back with him

Activists say 'everybody knew' about Libya slave trade

Erdogan says no contact 'at the moment' with Assad

Lebanon's Jumblatt criticises Saudi Arabia, Iran

China says it will make efforts on Syria reconstruction

Turkey to detain 79 former teachers in post-coup probe

Hezbollah hails PM's suspension of resignation

Syrian opposition aims for unity at talks in Riyadh

Egypt police kill 3 Islamists in shootout

Turkey unsure if Assad to be part of Syria political transition

Migrant arrivals from Libya down since EU deal

Palestinian factions leave Cairo talks with little progress

Sudan’s Bashir looks to Putin for ‘protection’ from US aggression

China, Djibouti forge 'strategic' ties

IS propaganda channels fall quiet in 'unprecedented' hiatus

Kremlin to create Syria congress despite Turkey ‘reservations’

Netanyahu berates deputy minister for 'offensive' remarks on US Jews

Egypt PM heads to Germany for medical treatment

Egypt destroys 10 SUVs carrying arms on Libya border

Outrage in Iraq over 'child marriage' bill

Iraq launches operation to clear last IS holdouts from desert

Saudi-led coalition to reopen Yemen airport, port to aid

Turkey court rules to keep Amnesty chief in jail

France calls for UN meeting on Libya slave-trading

Egypt detains 29 for allegedly spying for Turkey

WTO panel to hear Qatar’s complaint against UAE blockade

Three dead as diphtheria spreads in Yemen

Lebanon’s Hariri suspends resignation

Israel seizes explosive material at Gaza border

Activists call for release of UK journalist held by IS

Bahrain upholds jail sentence for activist

Iraq attacks at lowest since 2014

Turkey continues crackdown in post-coup probe

Hariri back in Lebanon

Putin to hold Syria peace talks with Erdogan, Rouhani

US carries out air strikes against IS in Libya

Divided Syria opposition meets in Riyadh

Lebanon's Hariri in Egypt ahead of return home