The National Assembly approved a request to urgently postpone loan installments for another six months, but government sources revealed their rejection of the parliamentary proposals to postpone loan installments for an additional 6 months, Al Qabas daily said. The daily said, quoting government sources, that the decision aims to gain favor from citizens as the elections draws near at the expense of the state budget, which is currently suffering a crushing deficit crisis.
The government-bank agreed to reject this proposal for it likely to cause severe damage to befall banks, harm the interests of shareholders and depositors, and without tangible benefit for borrowers, stated the daily.
There are other solutions that banks can help defaulters, with the foremost among them is the rescheduling of their loans. The government had received initial indications from banks that they could not bear the cost of any upcoming decision to postpone installments.
For its part, banking sources said to the daily that the banks have fulfilled their duty towards society by bearing the cost of their decision since the start of the coronavirus crisis to postpone the payment of loan installments for a period of 6 months, which incurred losses that exceeded KD370 millions, which will be reflected in their budgets for the next 4 years.
The conditions of banks when they first postponed loan installments for the first time are not the same as of now, especially since the major economic repercussions of the coronavirus crisis on banks have not yet been revealed, and the health crisis itself is still unclear. The banks represent the backbone of the Kuwaiti economy and the largest employer of citizens in the private sector, and harming them would hurt the financial sector and reduce their ability to provide new job opportunities for citizens, said the daily, quoting informed sources.
The daily said, quoting sources, that the initiators are owners of small and medium enterprises affected by the crisis are currently the priority of the government to address the repercussions of the coronavirus crisis, which has caused bankruptcy and default of loans for a large number of them. The calls to postpone installments reinforce the dependent behavior of the citizens and increases consumer spending, which was evident in the wake of the first postponement decision, as many of those people who benefited from deferred loans used the money to buy unnecessary possessions and luxury goods.