By Majd Othman
KUWAIT: The issue of purchasing the consumer and personal loans of Kuwaiti citizens has emerged in Kuwait as a heated subject. The issue reached the National Assembly after the parliamentary financial and economic committee prepared a special report on the cost of writing off or purchasing the loans and debts of borrowers. According to the report, the cost amounts to KD 14.6 billion ($50 billion) for 515,000 borrowers. The report was submitted to the National Assembly for a final decision.
A huge number of citizens support the purchasing of their loans, but many others think that it is a bad idea due to several reasons, most important of which is the principle of social justice. Kuwait Times spoke to many citizens who disagree with the idea of purchasing the loans. They discussed their points of view regarding this issue.
Sarah D said: "Where is the justice when one citizen buys a car with a KD 40,000 bank loan and another person uses his old car and doesn’t replace it with a new costly car, if the government writes off the loan of the former?” Ahmad A commented: "I personally know several people took bank loans between KD 20,000 to KD 55,000 to pay back over 10 to 15 years in the pre-COVID period to buy fancy cars, watches and branded products or travel in first class. But now they regret their decisions due to the huge debt burden. Do they deserve the waiving of their loans? Of course not!”
Suhail F agreed. "These people are the ones who are insisting on purchasing their loans, but the ones who took loans for expanding their homes or buying houses abroad, chalets and farms, or even investing in a business — they have no problem to pay off their debts with peace of mind.”
Kuwait Times spoke to lawyer Jasem Al-Foudari and discussed with him the legal aspect of purchasing loans in the context of social justice and if the decision is in accordance with the constitution. "It depends on the purpose of the loan waiver. If the main purpose is only to drop the loans, then it is impossible to reach social justice and it is against the constitution. If dropping loans will resolve developmental issues or this step is related to reconstruction of the country, then it is compatible with the laws of the constitution,” he pointed out.
"Nothing in the law prevents the authorities from taking a decision to drop loans,” Foudari added. "But they don’t think about the possible effects the decision will have on prices of essential commodities or if this will encourage citizens to take loans again because they will not have any financial obligations eventually. What worries us is that continuous loan waivers may prompt people to lead a luxury lifestyle oblivious of the fact that their irresponsible lifestyle puts a burden on the government and the people,” he said.
"In addition, if repayment of the loans is to fix some of the legal problems of the borrower, it can be resolved by creating a fund such as a delinquent fund. But bringing up the issue of writing off loans encourages many people to obtain loans to take advantage of the benevolent government policy,” Foudari said. "There are some voices calling for dropping the loans for popular support or personal benefit during elections. That is the reason why people in Kuwait are getting emotional about the issue and are getting carried away by their speeches,” he added.
Kuwait Times asked Foudari whether writing off loans will benefit the borrowers who are currently in jail for defaulting on their loans. "It could be a solution for some of the borrowers who have defaulted. But mostly, the persons who are in jail due to this issue have debts not only with banks. Therefore, their release from prison cannot be that easy,” he concluded.