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.

 

Obama's warfare doctrine to be tested in Syria

Top Saudi envoys hold talks with Qatar emir

UN moves to impose sanctions on Libya militias

Egypt quizzes Morsi for 'giving security papers to Qatar'

Lebanon seeks to tackle child marriage with new legislation

Vital aid arrives in war-battered Gaza

Hollande: Assad cannot be partner in fight against terrorists

Mother of US hostage to leader of Islamic State: Please spare my son

Turkey ruling party officially approves Davutoglu as new PM

US spy agencies face difficult task in Syria

Saudi Arabia jails 18 militants on terror charges

Gazans breathe sigh of relief

Litany of horrors becomes regular fixture in jihadist-held Syria

Iraq forces mass for onslaught on jihadist siege of Amerli

Doha offers help to rebuild Gaza

Iran alters Arak heavy water reactor over Western worries

New Turkey PM leaves successor troubled legacy

US rules out coordination with Syria on targeting jihadists

Algeria president sacks Belkhadem

Calm reigns over Gaza amid celebrations

Palestinians ‘reach’ long-term Gaza truce with Israel

Barzani: Iran provided us with weapons

US to track jihadists in Syria with spy planes

Top Iran official in Saudi to repair strained ties

Drums of war are beating anew on Capitol Hill

Israel air raid in Gaza kills two Palestinians

Deadly bus tragedy in Egypt

Car bomb rips through Baghdad intersection

Shebab flee Somalia strategic town in latest advance of African troops

South Sudan warring leaders sign fresh ceasefire deal

Who’s funding extremists? Qatar struggles to clean up tarnished image

Abadi calls on militias to come under Iraq state control

Nile dam row at heart of talks in Sudan

Ansar Sharia calls for jihadist unity in Libya

No let-up in Gaza war as Egypt raises new truce proposal

Thousands march in support of Yemen President’s call for national unity

Syria reaches out to former foes in fight against ‘terrorism’

Libya parliament names new army chief

Egypt warns only disarmament could spare Libya from intervention

Egypt offers new Gaza ceasefire

Iran to Israel: we will arm Palestinians

American held hostage for 22 months in Syria freed

Iraq calls for global support in fighting jihadists

Iran bolsters arsenal with new drones and missiles

Arab ministers discuss ‘rise of extremism’ in Saudi Arabia