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Solve the loan crisis

Ahmed Al-Jarallah Editor-in-Chief, the Arab Times

DENYING a problem does not mean it does not exist. Based on this, it is impossible to deal lightly with the loans and insolvency issue or to say that it is a simple issue.

It is also inappropriate to bank on the assumption that writing off the loan is a form of social injustice or the borrower should be responsible for his action and it is not up to the State to find a solution for such people.

All these assumptions could be taken into account if the issue was limited to a few people, not almost a third of the Kuwaiti population – the number of those facing legal action for insolvency.

It is also unfair that the number of arrest warrants and travel ban orders reached 305,367. This means a Kuwaiti family is being ironed with the fire of loans.

Usually, the debt cancellation issue is a commodity in the hands of populists who are seeking votes. Today, it is the platform of campaigns in the upcoming by-elections, or for members of Parliament keen on renewing their membership in the next general elections.

Therefore, it is impossible to accept the notion of investing and bargaining with the suffering and pain of the people just because of an idea based on a certain force or those benefiting from the status quo and are adamant in preventing solutions.

In 2010, a law on the establishment of an insolvency fund was enacted. However, the law did not meet expectations due to flaws which made it void. Instead of its intended purpose to rescue people, the law worsened their situation because it was established on flawed premises. Eventually, the law did not achieve the desired objective.

The government and the Parliament had the opportunity to remedy flaws in this law by taking into consideration the fact that debts – whether civil or commercial – do not undermine a person’s capacity. This prevails in countries all over the world.

This means the inability to fulfill a financial obligation such as payment of loan should not lead to the issuance of an arrest warrant, imposing a travel ban or preventing the borrower from accomplishing official transactions as these measures increase the suffering of the borrower. Once in jail, the borrower is completely incapable of fulfilling such obligations.

Hence, majority of those who gathered at Erada Square and those who did not participate although they suffer from the same issue basically opposed the principle of taking oppressive legal measures against them and payment plans which are not suitable for their income.

Consequently, it is necessary to find solutions which will completely emancipate them from the debt crisis that has become a social disaster for many families.

A common principle in credit finance is to guarantee loans through insurance. The lender should subscribe to this insurance before the loan is granted to prevent defaults in installments causing insolvency.

Nonetheless, given there are no guarantees on loans, the lender should bear the responsibility because he is deemed to have ill intent such that he is held accountable by the law.

Indeed, there should be a radical solution to this problem. It should be based on clear and firm principles in a manner which ends the suffering of people and families on one hand; and on the other hand, to increase the suffering of those behind this loan chaos, the objective of which is to make a profit even at the expense of the honor of citizens and their daily needs.

By Ahmed Al-Jarallah

Editor-in-Chief, the Arab Times

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