Kuwait Bank Lending Subdued on Government Spending, Bad Loans: Arab Credit - Bloomberg

The pace of Kuwaiti bank lending is slowing this year as delays on government projects and loan defaults by local investment companies hamper demand for debt in OPEC’s fifth-biggest oil producer.

Loans to the private sector and banks’ investments in bonds in Kuwait grew 0.3 percent in the first six months of 2011, after a 1.9 percent increase in 2010, according to data on the website of the nation’s central bank. Lending grew faster in neighboring Saudi Arabia, the biggest Arab economy, and in the United Arab Emirates and Qatar, as the region recovers from the impact of the global credit crunch.

Lawmakers in the Persian Gulf nation have sought to question Prime Minister Sheikh Nasser Al-Mohammed Al-Sabeh over delays in the implementation of a 30.8 billion dinar ($113 billion), four-year plan approved in February last year aimed at modernizing and restructuring Kuwait’s oil-based economy. Some of the country’s nearly 100 investment companies defaulted amid the credit crisis after the value of their assets collapsed and frozen debt markets prevented them from raising new loans.

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