Balance of Kuwaitis debts to be paid to banks about $40bln

Amount represents cost of dropping consumer loans and housing loans

Image used for illustrative purpose. Kuwaiti money changer Mohammed Hussein counts Kuwait dinars in his downtown Kuwait City shop.

Image used for illustrative purpose. Kuwaiti money changer Mohammed Hussein counts Kuwait dinars in his downtown Kuwait City shop.

REUTERS/Stephanie McGehee

KUWAIT CITY: The Central Bank of Kuwait stated that the balance of the consumer loans and installment financing services provided by banks and the investment and finance companies that are subject to the supervision of the Central Bank of Kuwait for Kuwaiti citizens (excluding interest and returns) amounted to about KD 12 billion as of end of March 2021, reports Al-Rai daily. It affirmed that this amount represents the cost of dropping the consumer loans and housing loans for citizens, indicating that the cost of dropping six-month debts of citizens will be higher than the cost of their postponement.

This declaration of the Central Bank was part of the response of the Minister of Finance and the Minister of State for Economic Affairs and Investment Khalifa Hamadeh to a parliamentary question submitted by Khaled Al-Otaibi regarding the cost of dropping consumer and installment loans by local banks, investment companies and finance companies subject to the supervision of the Central Bank.

Regarding the financial cost of dropping the benefits of consumer and installment loans for citizens in local banks, investment companies and others, the Central Bank revealed that, “The balance of consumer and housing loans and other financing operations by banks and investment and finance companies subjected to the supervision of the Central Bank for citizens without interest and returns amounted to about KD 12 billion. The total balance including the interest and returns due on those loans until the end of their terms is about KD 15.1 billion”.

Meanwhile, the Economic Affairs Committee in the Council of Ministers warned last week about serious structural imbalances in public finance and exacerbation of the liquidity crisis with the depletion of the General Reserve Fund, reports Al-Rai daily quoting sources. Sources said the committee estimated the budget deficit in the next five years to range between KD45 to KD 55 billion. Sources disclosed the concerned team is finalizing the national program for economic and financial sustainability, in cooperation with the Ministry of Finance, for submission to the committee.

This economic program extends for four years — from 2021 to 2025. It redefines the government’s role in the economy and presents solutions to the deficit. The employment policy in the public sector is not sustainable and that there are significant imbalances in the labor market, considering more than four out of five Kuwaitis working in government offices. The program aims to control spending and increase non-oil revenues; and in the medium to long term, to support economic diversification, improve the business environment, stimulate private sector growth, and develop the labor market. The program is being developed and revised according to data changes, stressing the development of the labor market by attracting foreign investment and supporting entrepreneurs and the industry sector

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