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Thursday , November 22 2018

Issue of unspent excess funds is affecting local banks again

No legal cover to renew or recycle the bonds

KUWAIT CITY, May 9: The issue of unspent excess fund has been affecting the local banks again. It is not about the decline in rate of facilities allocated for development project this time around, but due to government’s move to cash some paid public debts, reports Al-Rai daily.

The daily quoting a source noted the banks had recovered five different entitlements valued at KD400 million, which was previously invested in public bonds issued to service the budget deficit.

The banks were surprised when they received notification later that the government was no longer interested in renewing delayed payment, such that due payments will be made in cash within the next few months unless a legal change affects that position.

The source indicated the government will pay five installments worth KD450 million from June 2 to Sept 12; stressing the due payment had been scheduled to cover between one and two years.

Government’s explanation concerning the change in plan as regards dealing with the maturity dates— even if the budget is yet to transform from deficit to excess status, is based on the fact that there is no legal cover to renew the sum or recycle the bonds with another investor, the source said. He reaffirmed that government will be forced to pay installments of public debts in cash if the public debts bill is yet to be enacted.

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