Interesting fact, 9.7% of all loans in Kuwait defaulted in 2009, that’s the worst rate among the GCC countries. On the other hand Qatar had the lowest level with just 1.7% of loans defaulting. With the financial crisis UAE went through I would have figured the rate there would be higher but in UAE only 4.6% of the loans defaulted. Weird. [Link]
Thanks FYI
12 replies on “Loans in the Gulf”
Believe it or not, the problem originates not from the people who took the loans, nor does it come from the banks. Central bank regulations allowed people to take money that they could not afford to pay back. That’s why a few years ago Central bank applied the 40% rule, and last year, they applied the “one loan” policy… They are trying to fix the situation, but its going to take some time to get things straightened out. And the mean time, Kuwaitis continue to hope that the government will bail them out.
this is only the tip of the iceberg. actual figures are higher but are not reported as they have been rescheduled. a lot of window dressing. actual figures will hit by 2011.
that also may reflect the fact that Kuwaiti banks are more conservative in marking their loan books to market / writing loans off than their UAE counterparts
Zorban, how can this problem not originate with the people who took the loans? Did anyone force them to take out the loans?
I am saying they don’t share the blame…I am saying Central Bank allowed this to happen.
Its similar to what happened with the real estate bubble in Europe and the USA…
That should say, I am “NOT” saying they don’t share the blame 🙂
no they dont share the blame!!
if every other Parliament meeting they discuss that the government will bail the loans out… so y not i take a really big big big loan!!!
btw, that not right and not the way i think… i’m just saying how they think of it 🙂
i agree with manabry on this… i remember when the Parliament once decided that they were not going to bail the loans… chaos happened…. as long as there are meetings discussing the govt bailing the loans… ppl will just take advantage and take bigger loans… its kinda like a gamble
To make a better judgment of this “study”, you’d need to consider what statistical methods they used to arrive at those percentages. If it is based on a count or average of loans, includes personal loans, then the percentage for Kuwait might make sense. I would really doubt the case would be the same if they based it on the dollar value of nonperforming loans.
This is from the IMF report AME probably used for their article.
“Nonperforming loans (NPLs)
increased in most countries, with a notable increase in Kuwait due to loan
concentration in real estate, equities, and the battered investment companies’
(ICs) sector, in addition to significant losses by Gulf Bank in 2008”
you can find the full report below:
https://www.imf.org/external/pubs/ft/dp/2010/dp1002.pdf
Personally, I don’t trust the accuracy of these numbers. Especially when they list in the fine print “IMF staff estimates” and bloomberg as some of the sources of information.
Well everyone believes that the oil money will bail them out. However, they don’t realize that the oil money does not go to them. Wake up people and demand your share of the pie.
“demand your share of the pie”
they wouldn’t know what to do that pie; probably end up buying watches and LV bags.