The Central Bank of Kuwait (CBK) unveiled on Monday that the local banks have provided credit facilities at a total value of KD 2.7 billion (about USD 8.9 billion) to different businesses since the launching in early last April of a government package to stimulate the national economy.
In statements obtained by KUNA, the CBK said that 80 percent of the finances, KD 2.16 billion or USD 7.1 billion, were given to the businesses impacted by the novel coronavirus outbreak.
It pointed out that all economic sectors have benefited from the granted facilities. On April 2, the CBK announced that it has adjusted its regulatory instructions and macroprudential policy tools to empower local banksآ’ ability to perform their vital role, provide financing to productive economic sectors, and offer liquidity to help businesses continue operations.
It pointed out that the move aims to avoid turning a shortage in liquidity from turning into long-term solvency issues. The CBK also noted that the instructions issued include a reduction in liquidity requirements such as the liquidity coverage ratio, the net stable funding ratio, and the regulatory liquidity ratio.
In addition, they increase the maximum limits for the negative cumulative mismatch and the maximum lending limits to providing financing.
In an effort to target more support for small and medium enterprises, the credit risk weight has been reduced from 75 percent to 25 percent to calculate the capital adequacy ratio, in order to empower banks to provide more financing to this sector.
Moreover, the CBK instructions allowed banks to release capital conservation buffers within the capital base, thus reducing capital requirements. On financing for private housing and development, the new instructions included increasing the ratio of loans to value of the property or the cost of development.
