KUWAIT CITY: Parliament in the oil-rich Gulf state of Kuwait gave its initial approval on Thursday to a bill that requires the government to buy some $21.6 billion of loans taken out by citizens.
The plan stipulates that the state would reschedule repayment of the principal in interest-free installments over 10 years after scrapping current interest, estimated at more than $5.2 billion.
MPs passed the bill at first reading by 36 votes to 18, following a marathon 13-hour debate that ended in the early hours of Thursday.
Half of the MPs who voted against were cabinet ministers, who have ex-officio seats in parliament.
A second and final vote is to be held on January 5 and the bill is again expected to pass.
The government has strongly opposed the bill, warning of serious economic consequences.
Finance Minister Mustafa Al-Shamali told parliament the scheme breached the constitution and could cost up to $13 billion in public funds, in addition to encouraging citizens to spend lavishly.
MPs backing the plan blamed the government for causing a debt problem for citizens by failing to apply strict monitoring on local banks, which they said lured citizens into taking out loans beyond their ability to repay.
They said that more than 40,000 citizens are facing legal action over debt arrears.
But liberal MP Abdulrahman Al-Anjari said only 3.3 percent of the 489,000 debtors faced problems repaying their loans, with the total amount of their debt totalling just $450 million.
This clearly shows there is no default problem. MPs are politicising the issue for electoral gain while putting the national economy at real risk, he said.
The bill would require the government to use returns on some $30 billion of state deposits at local banks to cover the cost of the scheme.
Kuwait, which says it sits on 10 percent of global oil reserves, has a citizen population of 1.1 million people. It pumps around 2.2 million barrels per day.
The emirate is estimated to hold assets worth $230 billion, mostly invested abroad, amassed during the past decade on the back of high oil prices.
More than 80 percent of the citizen workforce is employed by the government and their average monthly salary is $3,500. Per capita income last year was about $40,000. – AFP
