Kuwait set to support coronavirus-hit economy amid low oil prices

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Kuwait will announce measures later on Tuesday to shore up the economy against the coronavirus pandemic, a government source told Reuters, while the central bank separately asked banks to ease loan repayments for companies affected.

Kuwait, which as of March 31 had registered 289 coronavirus cases, was the first Gulf state to halt passenger flights and impose a partial curfew to stem the spread of the highly infectious respiratory illness.

The sectors most impacted by the pandemic include aviation, hospitality and real estate, said the source, adding that government measures would include exemptions from government fees and credit facilities for those affected.

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The central bank has asked lenders to postpone loan repayments for three months for companies hit by the crisis, the governor, Mohammad al-Hashel, said in a television interview posted by the central bank on Twitter.

Kuwait is also dealing with the impact of lower oil prices on its finances that is expected to lead to a higher government fiscal deficit this year.

The government source said that, in the light of the oil price fall, passing a debt law that would allow Kuwait to borrow more has become a “government priority.”

Kuwait has drawn down on its state fund, the General Reserve Fund, to cover its deficit.

The source said the government withdrew 43.8 billion Kuwaiti dinars ($139.70 billion) from the fund in the five years until the 2018-2019 fiscal year, and 3.7 billion dinars in the 2019-2020 fiscal year.

This means the fund has around 14 billion dinars ($44.65 billion) left in it, the source said.

Moody’s this week placed Kuwait’s Aa2 rating on review for a downgrade, citing a “significant” decline in government revenues.

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