450,000 citizens to benefit from postponement decision
KUWAIT CITY, April 1: The cost to be borne by the state budget for the implementation of the decision to delay loan installments by six months, and for supporting and guaranteeing the financing of entrepreneurs affected by the COVID-19 crisis is about KD 600 million, but with the assumption that the state would bear the cost of some small and medium- sized enterprise owners defaulting to repay the financing they will receive in the future, reports Al-Rai daily quoting sources from the banking sector. They explained that the number of citizens who will benefit from the postponement of loan installments at banks and financing companies is about 450,000, with the value reaching up to KD 340 million which will be fully borne by the State Treasury. The cost of supporting credit entrepreneurs is likely to reach about KD 40 million, of which it is spent quarterly during the period of the law. The potential cost of default is close to KD 200 million, including the proceeds of guarantee fees
The decision to postpone installments includes only citizens and does not apply to expatriates and Bedoun residents. The beneficiary segment includes borrowers from banks and financing companies, the fund allotted to help the defaulting entrepreneurs, the Family Support Fund, the Public Institution for Social Security, the Kuwait Credit Bank and the Public Authority for Housing Welfare.
It is likely that the entire cost of deferring loans owed to the state will reach KD 376 million. The sources said they expect the banks may resort to the measures they applied in the previous postponement of installments, as all citizens’ installments are expected to be automatically postponed, except for those who submit a request stating that they do not want to postpone.
While banks and financing companies acquire the largest value of the cost of deferring loans, with a share of KD 340 million, the government agencies’ share of the cost of deferral is KD 36 million, distributed by KD 19.5 million for postponing replacement installments, KD 10.32 million for advance pension installments, KD 5.05 million for contributions from owners of businesses in the private and oil sectors that are not owned by the state, KD 1.15 million for the contributions of the insured persons in Chapter Five, and KD 0.11 million for the installments of the defaulters and family support funds.