KUWAIT, April 5 (KUNA) — Kuwait is currently reaping benefits of prudent monetary policies that have been adopted since a decade ago, in face of current unprecedented crisis ripples of which extended to all corners of the world, Central Bank of Kuwait Governor Mohammad Al-Hashel has said.
Basically, the present crisis is humanitarian, as coronavirus pandemic continues to take lives, however it has drastically affected demand and supply in various economic sectors, the CBK Governor indicated in a freshly-aired interview with Al-Arabiya television channel.
At regional level, “we are fighting on two fronts,” with the human race struggling to choose between saving lives or their livelihoods. Moreover, “We have witnessed drastic fall of oil prices at 65 percent since end of 2019,” said Al-Hashel as he analyzed some aspects of the issue.
Each of these dimensions in itself is a “grave shock,” and now they have come together, Al-Hashel said, also indicating at lack of sufficient information about the virus and its effects; thus the crisis impact on macro-economic conditions cannot be accurately measured, for now. Moreover, there have been no accurate assessment of efficacy for states’ policies to cope with economic repercussions.
“What awaits us in the future cannot be predicted,” added Al-Hashel, describing how the coronavirus crisis has resulted in a chain of multiple problems at various levels, namely in the economic, monetary and financial fields.
As to Standard and Poor’s lowering of Kuwait sovereign rating, the governor commented, saying, “Such a matter was expected in shadow of these circumstances.” However, he indicated that although Kuwait lost a single degree in the latest assessment, its ranking in this respect remained relatively high.
He attributed question to slow reforms and low oil prices amid lack of a consensus among producers on a new output ceiling, noting Kuwait could regain its former ranking once the oil issues have been tackled.
About Kuwaiti’s banks measures in face of the pandemic breakout, Al-Hashel said the CBK, since eruption of the 2008 global financial crisis, has worked out protective measures, guiding the banks to boost their capitals, secure back-up emergency funds, in line with Basel-3 package of criteria that “we fully implemented in 2014 and 2015.”
“We kept working and shrugging off complacency in good times.”
Due to the CBK well calculated policies, the banking sector currently “enjoys robust financial conditions mirrored in the Kuwaiti banks financial safety indices as solvency and liquidity, at rates higher than those internationally accredited, “and this what we are benefiting from today in the face of the current crisis.”
On the CBK measures to back up the economy and the banking sector, Dr. Al-Hashel noted that the CBK had lowered discount rate to 1.5 percent, the lowest and historic fall.
Moreover, the central bank slashed the Ribo interest, prices of the CBK intervention tools in the monetary fund, part of a chain of measures aimed at lowering borrowing costs and beefing up liquidity as well as maintaining the Kuwaiti dinar “attractiveness.”