The persistent social crisis, now stretching over three decades, is complicated by individual biases that impede any meaningful solutions. At its core, this crisis revolves around citizens who are struggling with loan obligations, many of whom are desperately seeking ways to avoid imprisonment, particularly in light of the renewed enforcement of arrest warrants. Official statistics indicate that around 224,000 Kuwaiti citizens are currently burdened with outstanding loans. Immediate action is needed to address this longstanding issue. Most borrowers took loans to meet essential needs, such as funding their children’s education, covering overseas medical treatment, building family homes, or taking care of other vital necessities.
The resolution of this social crisis depends on the understanding that the government holds several viable solutions. Potential measures include restructuring loans, establishing long-term installment plans spanning 20 to 30 years, and waiving compounded interest, which often causes debts to balloon far beyond the initial principal. Solving this problem is straightforward, not miraculous. The Minister of Finance must first coordinate with banks to agree on a loan rescheduling plan and its timeframe.
This proposal does not require the government to pay off the loans directly, but rather providing guarantees to secure them. As previously noted, borrowers would repay only the principal over a 30-year period. For instance, a citizen with a KD 30,000 debt would have an annual payment of just KD 1,000, which is a simple and manageable arrangement. If the government wishes to extend further support, it could cover the interest payments, as negotiated with the banks. There are many straightforward solutions available to address personal debt and alleviate the burden on citizens without causing financial losses or resorting to extreme measures, such as issuing arrest warrants or imprisoning individuals for small debts, some of which do not exceed KD 1,000.
It is important to emphasize that this focus on personal debt would not affect commercial loans granted to companies and institutions, which are usually secured by collateral often worth several times the loan amount. Kuwait has various methods available to resolve this issue. For instance, it could adopt an approach similar to that used in 25 African and Arab countries facing financial difficulties, where repayment periods were extended from 18 to 30 years for total debts reaching USD 21 billion. By comparison, the personal debt of Kuwaiti citizens (excluding housing loans) is far smaller, totaling approximately KD 1.7 billion. Therefore, resolving the crisis requires treating citizens similarly to how people are treated in other countries.
This approach would stimulate consumer spending and help alleviate many of the social problems currently affecting numerous Kuwaiti families. Irrelevant arguments about why people borrowed, appeals to social justice, or concerns for those who did not borrow should be dismissed. Those who chose not to borrow simply had no need to do so, making such objections largely irrelevant.
