Two local banks, one traditional and the other operating in accordance with Islamic law, recently signed a financing contract for a government project worth approximately 120 million dinars.
Banking sources told Al-Rai that it is planned to absorb the value of financing in the construction of a residential real estate project that includes a commercial center, at a total cost of about 150 million dinars.
According to Central Bank of Kuwait data, loans granted to the construction sector jumped by 22.68 percent on an annual basis, to reach 2.288 billion dinars at the end of last year, after recording an increase of 0.84 percent on a monthly basis during last December.
The sources did not clarify the value of the financing interest agreed upon with the investor who obtained the financing, or its repayment deadlines, but they confirmed that the rates and the period did not deviate from the rates in circulation in the market, and that they take into account the purpose of the loan, noting that the loan falls within the major financing granted by banks.
The sources pointed out the importance of financing, which is increasing in terms of the value it constitutes in the loan portfolio, it is likely that it will not be possible to grant major financing loans in the near future, especially in light of the political and economic obstacles that Kuwait has been witnessing for a while, the latest of which is the resignation of the government.
The sources indicated that banks are seeking to open new credit lines with various government institutions and private sector units, but the challenges they face and their increasing complexities for a while as a result of the slowdown in offering development projects according to the scheme last year, reduced their chances of recording the targeted credit growth from major projects.
The sources said that there is a strong probability that the government will not be able or willing in the near future to take important decisions necessary to complete large tenders and award contracts, while it is expected that projects whose budgets have already been approved will witness some progress in addition to smaller deals such as those related to maintenance contracts.
It is noteworthy that, according to the “Med Projects” index, which tracks projects in the region, the value of projects planned or under implementation in Kuwait from December 9, 2022 to January 13, amounted to about $197 billion, ranking sixth regionally and fourth in the Gulf.