Connect to share and comment

Kuwait MPs pass in principle law to bail out debtors

PlacardEnlarge
(Globalpost/GlobalPost)

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 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.

oh/ak/hkb

http://www.globalpost.com/dispatch/news/afp/130319/kuwait-mps-pass-principle-law-bail-out-debtors