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Kuwait parliament delays debt relief vote
KUWAIT CITY - The Kuwaiti parliament postponed a scheduled vote on a controversial multi-billion-dollar scheme to buy up citizens' private debt after heated exchanges on Tuesday.
- PUBLISHED: Tue 5 Jan 2010, 8:28 PM UPDATED: Mon 6 Apr 2015, 7:33 AM
- By:
- AFP
Speaker Jassem al-Khorafi adjourned the session until Wednesday as he failed to bring order to the floor when supporters and opponents of the plan traded accusations.
The bill, which was approved at first reading two weeks ago, would require the government of the oil-rich Gulf state to buy up some 21.6 billion dollars of personal and consumer loans taken out by citizens.
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It would require the government to reschedule the repayment of the principal in interest-free instalments over 10 years and forgive the interest currently owed, which is estimated at more than 5.2 billion dollars.
The government has strongly opposed the bill, warning of serious economic consequences and vowing to reject it even if parliament passes it at second and final reading.
Under Kuwaiti law, the government can reject legislation passed by MPs, but it must then go back to parliament, which can override the veto if it can muster a two-thirds majority in a new vote.
At first reading, MPs passed the bill by 36 votes to 18, following a marathon 13-hour debate. Half of the MPs who voted against were cabinet ministers, who have ex-officio seats.
In total, the 65-seat parliament has 50 elected members, one of whom is also a minister. The other 15 ministers hold their seats ex-officio.
Finance Minister Mustafa al-Shamali told parliament on December 23 the debt relief scheme breached the constitution and could cost up to 13 billion dollars in public funds, in addition to encouraging citizens to spend lavishly.
The minister said the government is currently helping citizen debtors who are unable to repay through a 1.75-billion dollar defaulters fund set up a year ago.
MPs backing the plan however blamed the government for causing a debt problem 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.
The bill would require the government to use returns on some 30 billion dollars 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 holds assets estimated at 230 billion dollars, 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 dollars. Per capita income in 2008 was about 40,000 dollars.
