Kuwait needs to invest up to 6 billion dinars ($21 billion) in the local stock market to stem a slide in the wake of a global crisis, National Bank of Kuwait said in a report on Thursday. “The fund needs to buy value stocks, selected by the Kuwait Investment Authority (KIA), and it needs to buy and it needs to keep its transactions continuous,” Kuwait's biggest bank said in a research report. NBK said that the 1.5 billion dinars ($5.26 billion) the government has said it wants to spend was not enough to end a slide on the Arab world's second-largest bourse which fell 38 percent last year. Kuwait launched the fund managed by its sovereign wealth fund KIA in end-December as part of measures to tackle the impact of the global crisis. The government of the world's seventh-largest oil exporter should also increase spending to help stimulate the economy, especially for infrastructure and other projects, NBK said. “Fiscal stimulus is needed at a time when the oil sector and the private sectors are expected to retrench,” NBK said. Finance Minister Mustapha Al-Shamali said on Wednesday the government planned to reduce expenditures in the fiscal year 2009/10 starting in April except for wages and investments. He declined to say whether Kuwait would post a deficit this year. In the first eight months of the fiscal year it posted a surplus of 8.06 billion dinars but oil revenues, its main source of income, have fallen since then. Kuwait, like others, has been affected, to a milder extent but affected nonetheless. Oil and stock prices took a tumble in in the fourth quarter of 2008.
