Kuwait's Cabinet wants to pass its $5.15 billion stimulus bill as an emergency measure in the absence of parliament, the country's finance minister said in remarks published Tuesday. Mostafa Al-Shimali told Alrai daily that the global crisis was affecting everybody, and the “economic situation as well as public opinion” were pushing for quick action. He said the package, as well as the 2009-2010 budget and a capital market authority bill, will be on the agenda at the Cabinet's meeting this week. The ruler of Kuwait dissolved the legislature last week and called for new elections within two months, saying some lawmakers have abused democracy and stalled development. The country's 1962 constitution gives the emir the right to legislate by decree on “necessary” matters when parliament is not in session or dissolved. When the house comes back, however, it can vote down these laws. The Central Bank unveiled its stimulus plan in February, but it had been held up in a parliamentary committee with some lawmakers complaining it did not abide by Islamic law. Others have threatened not to approve it unless the government buys or reschedules billions in private debts owed by citizens. The plan aims at helping struggling investment companies and offers bank loan guarantees. The economy, which is solely based on oil revenues, has been struggling with fallout from the global crisis. The equity market has seen a drop of around 13 percent year-to-date, and two major financial institutions have defaulted on billions in debts. Lawmakers have since December helped put the brakes on a $17 billion deal with U.S. giant Dow Chemical and a project to build an oil refinery, damaging the country's business reputation. Standard Chartered Bank has said the urgent approval of the plan would be “a move in the right direction” but warned that “on its own it will not manage to drive the economy in a year where investors and corporations are likely to adopt caution and hold back on their spending plans.” In a report released Monday, the bank said Kuwait, which sits on 10 percent of the world's oil reserves, could also benefit from an expansionary budget to counter the effects of the meltdown, though “the likelihood is that government spending will be reduced due to the lower oil prices.” The 2009-2010 budget which starts April 1, foresees a 4.25 billion dinar, or $14.72 billion, deficit and cuts on capital spending. However, Kuwait's shortfalls always turn into surpluses because oil revenues are calculated at lower prices than what they actually sell for. Meanwhile, assets held by Kuwaiti investment companies slumped by $32 billion in the six months to January as a result of the global economic meltdown, official media said on Tuesday. The assets of 99 Kuwaiti investment firms slid 31 percent to $72 billion from $103 billion at the end of July, the KUNA news agency reported, citing official figures. The drop reflected a 45 percent or $26 billion decline in their holdings of companies listed on the Kuwait Stock Exchange, as well as falls in local mutual funds and investments abroad. Kuwait's bourse, like others in the Gulf states, has dropped by around 57 percent since peaking at the end of June, wiping $100 billion off the market's capitalization. About half of Kuwait's investment firms are listed on the bourse but all are overseen by the central bank. A number of local investment firms have defaulted on loans estimated at $18 billion, including $8 billion owed to foreign banks, because of the credit crunch. Kuwait is in the process of adopting a stimulus package that aims to help ailing local companies with a special emphasis on banks and investment firms. The bill has been stalled in parliament for more than six weeks but the government is expected to adopt it via decree after the emir last week dissolved parliament and called for snap polls within two months. The package could cost public funds up to $5.2 billion, according to government estimates, but lawmakers opposed to the legislation insist the cost will be much higher.
