Kuwait has collected seven billion dollars since 1995 under a massive debt rescue plan, about a third of the original total, the governor of the emirate's central bank said on Monday.
Sheikh Salem Abdelaziz al-Sabah told the official KUNA agency that debtors paid $485 million in the last installment last week, closing a bad debt crisis that continued for almost two decades.
About $20 billion of bad debts piled up following the 1982 crash of the unofficial Souk al-Manak stock exchange and were exacerbated by the 1990 Iraqi invasion, when many Kuwaitis lost their businesses.
The government purchased the debts in 1992 by issuing treasury bonds to local banks and investment firms, and succeeded the following year in passing the so-called Bad Debt Law through an opposition-dominated parliament.
The law gave 11,766 debtors, some of them highly influential businessmen, two repayment options with lucrative incentives.
The first allowed debtors to repay in full over a period of 12 years without interest, while the second option allowed for repayment in five equal installments over a period of five years with between 55 to 79 percent debt forgiveness.
A vast majority of the debtors, many of whom lost the loans through forward trading at highly inflated prices in 1982, chose the second option.
Under a 1998 amendment, the fourth and fifth installments were combined and redistributed over three equal repayments, the last of which was made on September 6.
Sheikh Salem said about 10,000 debtors responded to the bail-out scheme, paying seven billion dollars from their original debt of $13.2 billion.
Under the scheme, the remaining debtors owing $7.1 billion will be referred to the public prosecution and will most likely be declared bankrupt.
Al-Shall Economic Consultants said two weeks ago that the state would end up bearing some 5.5 billion dinars ($17.9 billion) in interest and debt forgiveness.
The central bank has so far paid most of the bonds and incurred interest to local banks and investment firms, but still had some 1.7 billion dinars ($5.4 billion) to pay as of last June 30.
The government has repeatedly said it was forced to help bail out debtors because it wanted to protect the local banking sector, but opponents insist the measure was designed to bail out influential businessmen.— ( Jordan Times )
© 2000 Mena Report (www.menareport.com)
