Kuwait's parliament has moved closer to approving a law that would write off citizens' debts on interest accrued on loans taken between 2002 and 2008. Elizabeth Dickinson reports from Kuwait City
Kuwait move to write off citizens' debts 'could set dangerous precedent'
KUWAIT CITY // Kuwait's parliament has moved closer to approving a law that would write off citizens' debts on interest accrued on loans taken between 2002 and 2008.
The assembly's economic and financial affairs committee unanimously approved a bill on Sunday that would cancel the debt, and offer a grant of 1,000 Kuwaiti dinars (Dh13,050) to anyone who did not benefit from the write-off. Additionally, the bill would open a new office in Kuwait's Central Bank to process borrowers' complaints, the state news agency reported.
Although popular among many Kuwaitis, a debt write-off has been opposed by the country's government, which has to approve bills passed by parliament before they become law.
Mustafa Al Shimali, the deputy prime minister and finance minister, told the parliamentary committee this month that the bill would be too costly and would set a dangerous precedent for future borrowers.
Also this month, Mohammad Al Hashel, the central bank chief, estimated the cost of the write-off at 1.6 billion dinars, according to the state news agency.
A similar debt-bailout bill was proposed in 2010, but the assembly voted against the measure amid strong opposition from the government.
Over the past several years, Kuwait has ratcheted up its current expenditures, including increases in wages, subsidies and direct transfers. In the fiscal year 2012-2013, the government's wage bill is forecast to rise by 16 per cent, having risen 24 per cent the previous year, according to a report in November by the National Bank of Kuwait.
In 2011, Kuwait's emir gave all citizens a one-time 1,000-dinar grant to commemorate the 50th anniversary of Kuwaiti independence and the 20th anniversary of the liberation of the state from Iraqi occupation. Local media quoted an MP yesterday saying that Kuwaitis can expect to receive 2,000-dinar grants in celebration of national holidays next month.