Kuwait's government has given the green light to the country's banks to finance a KD30 billion ($104.3 billion) development plan and is prepared to back them with guarantees, newspapers reported on Thursday. The four-year plan, passsed by parliament in February, is aimed at decreasing the Gulf state's dependence on oil for state revenues, and boosting private sector participation in projects. The government was directly providing 50 percent of the finances, while the rest will be provided by private investors. Al Jarida daily said the government decided in a meeting on Wednesday that banks can finance the plan's projects and they would be guaranteed by state deposits. “The government will initially provide financial guarantees valued at 10 billion dinars,” the daily quoted a high-ranking source as saying, without identifying him by name. The state agency KUNA said Wednesday's meeting headed by the Prime Minister, Sheikh Nasser Al Mohammad Al Sabah, decided the plan needed to be funded by local banks, and asked for a study on options of financial long-term support that could be offered to some companies. It did not elaborate. Banking stocks traded higher on the news. Burgan Bank rose 6.9 percent, Ahli United Bank gained 5.8 percent, while National Bank of Kuwait rose 3.1 percent. Independent analyst Ali Al-Nimesh said “the success of the plan lies in actual participation of the private sector,” he said. The plan, which started on April 1, includes building new ports and cities, and investments to raise oil and natural gas production. The plan, which runs to 2014, also includes investment on raising oil and natural gas production. The package should also attract more investments into the Gulf state and boost participation of the private sector in government projects. Kuwait, the world's fourth largest oil exporter, is expected to spend $145-$180 billion in its 2010/11 budget, Finance Minister Mustapha Al Shamali said in January.
