CBK Overcomes Covid 19 Repercussions With Essential Measures

The Kuwaiti banking sector announced financial results for the first quarter of 2021, which showed that this vital sector has overcome the fallout of the Covid-19 pandemic.

This proves the effectiveness of measures taken by the Central Bank of Kuwait (CBK) since the beginning of the crisis in April 2020. CBK took 43 measures to overcome the repercussions of the pandemic, Al-Rai daily reported.

These measures have been widely praised by international institutions such as the International Monetary Fund (IMF) and global credit rating agencies.

The measures taken since the first covid-19 case entered the country included four key areas: monetary policy, regulatory and prudential policy, financial stability, and social responsibility.

In March last year, the CBK cut the discount rate to 1.5 percent while reducing the interest rate on repo agreements by 1 percent.

The second measure came in October last year to reduce 0.125 percent in intervention rates on all interest rate structures up to 10 years, including reports, CBK bonds, term deposit acceptance system, direct intervention instruments, and public debt instruments.

In March 2020, the CBK banks did not submit interim financial statements for the first quarter of that year, and in April 2020, the banks were allowed to use 2.5 percent hedging capital buffers.

Measures included reducing the risk weight of exposures on SMEs to 25 percent instead of 75 percent, raising the maximum available funding to 100 percent instead of 90 percent, lowering the minimum liquidity coverage standard, lowering the minimum stable net financing standard, and lowering the minimum regulatory liquidity ratio.

The Central Bank’s actions on financial stability consisted of 18 measures and a circular calling on banks to activate emergency plans, business continuity, and respond fairly to crises, in addition to continuing to provide banking services to commercial companies supplying food-related commodities.

One of the important circulars in March last year was issued by CBK in the field of financial stability to postpone the loan installments of those affected for a period of six months without the application of penalty fees, in addition to a circular that obliges local banks to refrain from selling or executing on collateral against loans until the markets stabilize.

In the area of social responsibility, the central bank issued nine different circulars over the course of the corona year, most notably directing banks to provide financial and moral compensation to all employees in the banking sector during the closure period and establishing a fund to support government efforts to combat the pandemic worth KD 10 million, with funding from Kuwaiti banks.



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