A controversial bill to annul interest payments on personal debt in Kuwait has passed a first round of voting in the country’s National Assembly, or parliament, but may be cancelled by jurists before a second poll in January, according to a senior member of parliament.
Rola Dashti, one of Kuwait’s first female MPs and a member of the parliamentary finance and economy committee, says that the draft bill passed a first round of voting in a 23 December session that went on until four o’clock in the morning with MPs agreeing in principle to its contents.
However, there was sufficient opposition to the plan to prevent it being moved from draft to full bill status in a second round of voting, Dashti says.
Under the terms of the proposed bill, banks would be forced to cancel interest payments on any personal debt like short-term loans or mortgages arranged before 14 December 2009. The only incentive being offered to banks would be the estimated KD8.5bn of deposits made by the government in local banks, with no guarantees made that the government would continue to keep depositing money.
Dashti says that the bill may be vetoed before the next round of voting on 15 January, as the cabinet let by prime minister Sheikh Nasser Mohamed al-Ahmed al-Sabah will refer it to the country’s constitutional court.
“It is unconstitutional,” she says. “The banks will say that they have a contract and that you can’t force them [to cancel interest payments] without compensation. The bill needs a lot of changes before it can be passed.”
Personal debt has become an increasingly controversial matter for Kuwait’s government in recent years as nationalist MPs demand an amnesty for the estimated $25bn of consumer debt in the country. The chief argument for wiping debt out is that Kuwait’s citizens do not see enough of the vast oil and gas revenues raised the country raises.
The local National Bank of Kuwait forecasts that the country will have a $21bn-plus budget surplus in 2009.