Debt cancellation … social justice

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THE issue of loans poses a dilemma for a large segment of Kuwaitis, who fall under many burdens because of it. Their problems increase in social, health and financial complexity, but the state continues to adhere to the opinion of some experts who are not involved in the economy and look at the matter from a slogan angle, or aim to serve the big financiers who seek to acquire the largest amount of money and property by confiscating the properties of defaulters.

Whenever this issue is raised, those who highlight the unfairness in resolving it argue that those who borrowed bear the responsibility for that, while the rest of the citizens have nothing to do with this matter.

Here we ask them – If a certain area in Kuwait was exposed to an earthquake or a natural disaster, is it not the state’s duty to compensate its residents? Or will you say that it also has to compensate the people of Yarmouk, Abdullah Al-Salem and Shamiya suburbs just as it compensated the people of that area?

There is no doubt that the one who took a loan did so because of an urgent need and he was paying the installments. However, for various reasons, he was unable to continue paying and became a victim of an unfair law. It led to his imprisonment, travel ban or legal prosecution, and the seizure of his property, which sometimes is nothing but his house and his car, as well as the seizure of his salary, to add to his crisis. All these socially unjust actions require consideration of them with responsibility, and not treating everyone based on one standard.

Kuwait, as is the case with the rest of the world, is currently living in the shadow of the COVID-19 pandemic, which has cast its shadow over all forms of life. The precautionary measures adopted have caused more financial distress for large numbers of people in the world. While most countries worked to protect their citizens by dropping loans or interests and rescheduling the debt principal, as seen in the Kingdom of Saudi Arabia, Bahrain and other Gulf countries as well as European countries, the crisis in Kuwait was completely different.

The state did not move a finger; rather, the decisions taken by the government and the Central Bank further complicated the crisis of the defaulting borrowers. Most of these loans were taken from banks, and when the state bears them and reschedules the principal of the debt for twenty or thirty years, and waives off the interest, they are then re-shifting the economy and raising the national product, because they revitalize the financial cycle. This will prevent a repeat of the wrong treatment of Al-Manakh Market crisis, which to this day has recorded about KD 7 billion from the budget, and is still being collected even though about 80 percent of the debtors have died. It would have been easy to solve this crisis in a way that revived the financial cycle at that time.

Today, a proposal has been submitted by some MPs to address the consumer loan crisis. Even though it needs to be developed, we hope that it will not become like the insolvent fund law that made matters worse instead of solving the problem.

We once again emphasize that the solution to the issue is very simple, which is for the state to buy the debt, return it to its original value, and pay it out over a period of 20 or 30 years, thereby achieving the slogan of those who sing about social justice, while at the same time lifting injustice from the rest of the defaulting citizens.

By Ahmed Al-Jarallah

Editor-in-Chief, the Arab Times

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