KUWAIT CITY, March 18: Citizens who will benefit from the debt relief bill if it gets passed in the Parliament are victims of inflated interest rates and deserve to be bailed out, says noted political commentator and academic Dr Khaled Aljenfawi.

The Kuwait University professor was talking to the Arab Times Monday following reports that the Parliament’s financial and economic committee had finalized the bill to write off citizens’ interest on loans.

He hailed the inclusive nature of the bill, which was earlier dithering on the fate of clients of Islamic banks and those who benefited from a previous fund set up in 2010 to help defaulters.

Aljenfawi sought to silence critics of the bill saying that several studies have already shown that many Kuwaiti families are suffering under heavy debt burden, and that the bill has got huge social implications. “This is not a political issue.”

Asked why the public fund has to bear the strain for the sin of individuals, the analyst said the blame should also fall on shaky financial policies relating to interest rates in a particular period “which the citizens, who couldn’t fully appreciate its long-term consequences, fell a prey to.

“If the people are not provided with some reprieve for their debts, then the situation will escalate, which can destabilize the social fabric of the nation.”

Aljenfawi also called for greater regulations on private banks to ensure that their race for profits don’t affect the customers badly. “The Central Bank must also issue regulations on the consumer and commercial loans to ensure greater fairness on all sides.”
The political analyst also stressed the need for raising awareness among the people on well-advised loan procurement methods.

On the question of inclusion of expatriates in the bill, which is yet unclear, Aljenfawi did not sound too optimistic, but sufficed it by saying that it could come about eventually, once the issues of citizens are settled. “The opinions of the private banks will be key in this regard.”

The deal calls for the setting up of a ‘Family Fund’ by the government, which will purchase bank loans granted between January 1, 2002 and March 31, 2008. The debtors will then have to pay the principal amounts into this fund, interest waived off, in easy installments not exceeding 40 percent of the debtors’ monthly income.

More than 66,000 Kuwaitis are expected to benefit from the debt relief. With the bill now expanded to include Islamic banks’ clients and people who benefited from the government’s insolvency law, the total cost of the relief will touch KD 950 million.