Kuwait's local banks to fund $104bn plan - report

PARLIAMENT NOD: Kuwait's parliament approved the four-year plan in February.

Kuwait's government has given the green light to the country's banks to finance a KD30bn ($104.2bn) development plan and is prepared to back them with guarantees, newspapers reported on Thursday.

Kuwait's parliament approved the four-year plan in February. It is aimed at decreasing the Gulf Arab 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 decision "put the banking sector and the private sector at ease," because there had been talk about funding the plan through a state fund.

"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.

OPEC member Kuwait is the world's fourth largest oil exporter. ($1=KD0.2878)