BEIRUT: Kuwait banking sector is solid and capable of withstanding domestic or external financial challenges that might have impacts on national economy, the country’s top banker said. “The history of the banking sector in Kuwait reflects its ability to confronting different challenges, enabling it to overcome consequences of global financial crisis in 2008 … when many countries around the world suffered huge losses because they wanted to rescue their banks, which was a burden on their budgets and thus impacted citizens’ living conditions,” said Mohammad Al-Hashel, Governor of the Central Bank of Kuwait (CBK).
He was speaking in an interview with Al-Bayan, a monthly Lebanese magazine specialized in banks, insurance and freight in the Middle East. CBK, he added, implemented a policy enabling national banks to withstand ramifications of oil prices’ nosedive in the second half of 2014.”The banking sector, based on CBK’s policies, continues its service of the national economy with high efficiency,” to ultimately contribute to addressing the state budget deficit, said Hashel.
He cited a 2017 report by the International Monetary Fund (IMF) that affirmed Kuwait’s banking sector was implementing wise regulations put in place by CBK, which strengthened supervision and management. Kuwaiti banks, according to IMF report, were following Basel III that was based on a set of reforms designed to improve regulation, supervision and risk management. Hashel said another IMF report, issued in March 2019, welcomed solid foundation of Kuwait banking sector and commended CBK’s management and supervision regulations. Credit rating agencies, like Fitch and Moody’s, also commended CBK’s regulations which contributed to strengthening financial conditions of local banks.
Hashel was asked about growth and job creation, and said the government of Kuwait had adopted a set of financial and economic reforms aimed at boosting growth and creating jobs. “This aims at diversifying economy and promoting private sector to play a further role in economic activities,” said Hashel. “Having a greater involvement of the private sector will ease burden on state budget. This can happen through privatization and establishing genuine partnership between the private and public sectors,” he said. He called for improving quality of education and training to meet private sector’s demands. Development of private sector’s role, diversifying economy and supporting SMEs will certainly promote growth, said the CBK Governor.
Hashel, meanwhile, said CBK’s next five-year strategy aimed at cementing monetary and financial stability, in addition to ensuring safety and strength of the banking sector. CBK also seeks to maintain stability of the exchange rate of the local currency, the Kuwaiti dinar, and manage interest rate in line with national economy and international interest rates, with the objective of having sustainable growth. The Central Bank, said Hashel, was enforcing strict supervision measures in line with international standards, developing infrastructure of information technology to facilitate clearing operations, developing human resources and using technology to further improve supervision. – KUNA