On April 2, the Central Bank of Kuwait (CBK) announced that it has offered KD 5 billion (USD 16.5 billion) additional lending to empower vital sectors and small and medium enterprises (SMEs) amid the fallout from the COVID-19 pandemic. The package is launched as macroprudential policy tools to encourage banks, provide financing to help productive sectors, and offer liquidity for businesses to continue operations.
The issued package includes a reduction in liquidity requirements, including the liquidity coverage ratio, the regulatory liquidity ratio, as well as the net stable funding ratio. Adding to that, CBK is also increasing the maximum limits for the negative cumulative mismatch and the maximum lending limits from 90% to 100%.
The credit risk weight has been eased for SMEs from 75% to 25%, empowering banks to provide more financing. Moreover, the CBK allows banks to release capital conservation buffers within the capital base to reduce capital requirements. On financing for private housing and development, the Loan to Value (LTV) ratio will be increased for properties.
Other economic measures include the establishment of a temporary fund to receive financial contributions from locals, the increase of limit for contactless payments to KD 25 from KD 10, and also a suspension of fees on point of sales devices and ATM withdrawals for three months.
The CBK said that it would continue to closely monitor the banking sector, ensuring the new instructions effectively meet their intended goal, and will not hesitate to take more actions to preserve Kuwait’s national economic interests.
The government of Kuwait is also giving support for the salaries of those in the affected sectors which are also registered under Chapter Five of Social Security and are easing withdrawals from the retirement pension.
In order to protect its residents, the government is establishing a mechanism to secure a minimum income which ensures the cost of living for workers affected by the pandemic. The government is also working to maintain stability in the levels and prices of food and medical commodities in Kuwait’s local markets
Furthermore, a Higher Steering Committee for Economic Stimulus has been formed to implement the stimulus for the local economy through a series of measures approved in the cabinet resolution on March 31, 2020.
Kuwait has been implementing strict precautionary measures after its first cases of COVID-19 were recorded in late February. As of April 18, Kuwait has recorded 15,691 with 118 deaths and 4,339 recovered patients.
Kuwait was the first Gulf state to ground all passenger flights with all non-cargo flights in and out of Kuwait that have been suspended as of March 13. Mosques and public spaces are also closed, followed by a nationwide curfew implemented since March 22 to curb the virus. Schools and universities are also closed, with the earliest date for their reopening have been pushed back until August 4.
Moreover, the Al Kout Beach Hotel and Al Khiran resort have been repurposed as quarantine centers, while the International Fairgrounds in Mishref is being used as a field hospital and testing center. Kuwait has also launched its first drive-through COVID-19 testing center at the Kuwait International Airport, supporting the country's testing capability.