KUWAIT CITY, March 10: Chairman, Kuwait Finance House (KFH), Hamad Abdulmohsen Al-Marzouq stated that over 3 years, local banks are able to subscribe in KD 3 to 5 bln in government bonds that are likely meant to bridge the budget deficit.
“Downgrading the credit rating for any country takes a toll on the cost of borrowing from external sources. Kuwait’s credit rating is exposed to be reconsidered or even downgraded due to the drop in oil prices. Certainly this would have an adverse impact on the cost of borrowing of financial institutions” Al-Marzouq added in a press statement on the sideline of the Kuwait Investment Forum.
However, he affirmed that local banks enjoy several characteristics, most of which is asset quality and strong capitals, noting that the local banks offered financing for global banks amounted to US$ 13 bln. This cushions banks from higher borrowing costs.
He added that banks enjoy high levels of liquidity, indicating they posted an increase in the private sector, government and foreign deposits.
Al-Marzouq revealed that the Banking Association offered its vision through a study to the Minister of Finance Anas Al-Saleh, and the Governor of the Central Bank of Kuwait, Dr Mohammad Al-Hashel illustrating local banks’ efficiency and ability to contribute in bridging the budget deficit.
He said that the government deposits at banking sectors surged from US$ 5.2 bln to US$ 5.6 bln in 2015. “The government won’t withdraw from its deposits to bridge the budget deficit” he opined.