- May Khamis, and Abdelhak Senhadji
- Published Date:
- July 2010
Available at: http://www.imf.org/extemal/pubs/ft/dp/2010/dpl001.pdf
In Kuwait, as of June 2010, five Investment Companies (ICs) had defaulted on their debt—including Gulfinvest International, which was in default on a U.A.E. dirham 200 million loan from the Abu Dhabi Commercial Bank, and International Investment Group, which was in default on payment for its $200 million Islamic bond.
Gulf Bank losses were on account of client-related derivatives transactions. In the U.A.E., the bulk of the increase in NPLs in 2009 resulted from instructions issued by the Central Bank to classify loans to the Saudi Arabian conglomerates Algosaibi and Al-Saad. For 2010, exposures related to DW are likely to raise NPLs by less than 1 percentage point, and some deterioration in the rest of the loan book cannot be excluded.
With the exception of Kuwait, which had already experienced a significant decline in bank profitability in 2008.
In 2009 in Qatar, prices measured by the consumer price index declined by almost 5 percent.
The Central Bank of the U.A.E. introduced an additional liquidity facility in the aftermath of the DW event.
Global Investment House, GCC Banking Sector Quarterly, June 2010. The analysis covers thirty listed GCC commercial banks.
The expansionary 2010/11 budget in Kuwait was adopted in the context of the recently approved Development Plan. The plan seeks to boost investment expenditures across the board, with government cost estimated at $55 billion (56 percent of 2009 GDP) over the next four years, to be matched by the private sector through public-private participation and joint stock companies.
Higher rents are also expected to contribute to inflation in Saudi Arabia.