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167961
Mon, 03/14/2011 - 09:06
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https://www.oananews.org//node/167961
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CBK Governor predicts robust economic growth in ''11
KUWAIT, March 13 (KUNA) -- Governor of the Central Bank of Kuwait (CBK) Sheikh Salem Abdulaziz Al-Sabah said Sunday the economic performance in 2010 was so good that the country enjoyed the highest sovereign credit rating in the Middle East.
"The country maintained good domestic and foreign balance surpluses particularly in terms of current account which constitutes a benchmark for economic indices," Sheikh Salem told a news conference here.
"The IMF (International Monetary Fund) forecasts nominal GDP growth rate 17.3 percent and real growth rate of 8.3 percent in 2011. The investment spending in the current FY which ends in late March continued to grow, posting a 77 percent increase over the previous FY," he noted.
"The KD exchange rate vis-a-vis the US dollar is perfectly good and stabl e and is on the increase constantly while the credit growth kept expanding since 2008. Though the credit growth rate was meager in the wake of the global financial crisis, it was good in contrast to other Gulf countries," Sheikh Salem explained.
Some statistics put the credit growth rate in 2010 at 0.4 percent excluding the cash repayments by debtors, but the data available at the CBK put the rate at 1.8 percent or four times more than the unofficial figures.
The inflation rate remained within the reasonable parameters of four percent in 2009 and 2010 and is expected by the IMF to range between five and six percent in 2011, he pointed out.
The foodstuff prices are expected to drive the inflation rate up in the current year since the country imports the bulk of foodstuffs. The World Bank (WB) and the UN Food and Agriculture Organization (FAO) reported that the food prices grew by 30 percent in 2010, Sheikh Salem noted.
He added that the oil price rise has pros and cons on the economy since it results necessarily in food price surge and bigger inflation rate.
Kuwait has seen the biggest inflation rate of 10.6 percent in 2008 when the oil prices hit an all time record high of USD 147 per barrel, he recalled.
Commenting on the grant by His Highness the Amir Sheikh Sabah Al-Ahmad Al-Sabah to the Kuwaiti citizens last month, Sheikh Salem said it contributed to reviving the commercial sector and other economic sectors through the enhancement of the purchasing power.
As for the performance of the banking sector in 2010, he said the local banks managed to overcome the impacts of the global financial crisis and pursued reforming their crediting policies in the light of the CBK parameters.
"One of the main parameters set by the CBK as a regulatory authority is that solvency rate be no less than 12 percent of the capital or three percent more than the internationally recognized minimum of eight percent set by the second of the Basel Accords (Basel II)," Sheikh Salem went on to say.
"The solvency rate at the local banks went up from 16.7 percent of the capital in 2009 to 18.8 percent in 2010," he said, noting that the figures put the banks in a comfortable position.
The CBK projected the liquidity growth at the local banks at 18 percent but the banks managed to exceed this percentage by a big margin to secure 26.6 percent in 2009 and 28.9 percent last year.
The ratio of irregular debts to the banks' credit portfolio is expected to pursue the downward trend in the first half of 2011 after going down from 10.2 percent in 2009 to 7.4 percent last year, he affirmed.
The CBK compels the local banks to set aside provisions amounting to 100 percent of the total value of a debt one year after announcing that the debt service is irregular or the debt is a bad one. The measure enables clearing the budgets of these banks regularly on an annual basis, he said.
"The protectionist monetary policy adopt ed by the CBK since 1985 provided to be effective particularly while dealing with the financial meltdown of 2008. Though the process to build up provisions at the local banks is going on, these banks managed to make profits and pursue growth," he added.
Asked about the impact of the implementation of the Basel III standards by the banks, Sheikh Salem said this could weaken the competitive edge of the local banks vis-@-vis regional peers.
As for the performance of the investment companies, he said 40 such companies made robust growth in 2010, 35 others made good performance, and 15 fair while seven were bad, he added.
"The country maintained good domestic and foreign balance surpluses particularly in terms of current account which constitutes a benchmark for economic indices," Sheikh Salem told a news conference here.
"The IMF (International Monetary Fund) forecasts nominal GDP growth rate 17.3 percent and real growth rate of 8.3 percent in 2011. The investment spending in the current FY which ends in late March continued to grow, posting a 77 percent increase over the previous FY," he noted.
"The KD exchange rate vis-a-vis the US dollar is perfectly good and stabl e and is on the increase constantly while the credit growth kept expanding since 2008. Though the credit growth rate was meager in the wake of the global financial crisis, it was good in contrast to other Gulf countries," Sheikh Salem explained.
Some statistics put the credit growth rate in 2010 at 0.4 percent excluding the cash repayments by debtors, but the data available at the CBK put the rate at 1.8 percent or four times more than the unofficial figures.
The inflation rate remained within the reasonable parameters of four percent in 2009 and 2010 and is expected by the IMF to range between five and six percent in 2011, he pointed out.
The foodstuff prices are expected to drive the inflation rate up in the current year since the country imports the bulk of foodstuffs. The World Bank (WB) and the UN Food and Agriculture Organization (FAO) reported that the food prices grew by 30 percent in 2010, Sheikh Salem noted.
He added that the oil price rise has pros and cons on the economy since it results necessarily in food price surge and bigger inflation rate.
Kuwait has seen the biggest inflation rate of 10.6 percent in 2008 when the oil prices hit an all time record high of USD 147 per barrel, he recalled.
Commenting on the grant by His Highness the Amir Sheikh Sabah Al-Ahmad Al-Sabah to the Kuwaiti citizens last month, Sheikh Salem said it contributed to reviving the commercial sector and other economic sectors through the enhancement of the purchasing power.
As for the performance of the banking sector in 2010, he said the local banks managed to overcome the impacts of the global financial crisis and pursued reforming their crediting policies in the light of the CBK parameters.
"One of the main parameters set by the CBK as a regulatory authority is that solvency rate be no less than 12 percent of the capital or three percent more than the internationally recognized minimum of eight percent set by the second of the Basel Accords (Basel II)," Sheikh Salem went on to say.
"The solvency rate at the local banks went up from 16.7 percent of the capital in 2009 to 18.8 percent in 2010," he said, noting that the figures put the banks in a comfortable position.
The CBK projected the liquidity growth at the local banks at 18 percent but the banks managed to exceed this percentage by a big margin to secure 26.6 percent in 2009 and 28.9 percent last year.
The ratio of irregular debts to the banks' credit portfolio is expected to pursue the downward trend in the first half of 2011 after going down from 10.2 percent in 2009 to 7.4 percent last year, he affirmed.
The CBK compels the local banks to set aside provisions amounting to 100 percent of the total value of a debt one year after announcing that the debt service is irregular or the debt is a bad one. The measure enables clearing the budgets of these banks regularly on an annual basis, he said.
"The protectionist monetary policy adopt ed by the CBK since 1985 provided to be effective particularly while dealing with the financial meltdown of 2008. Though the process to build up provisions at the local banks is going on, these banks managed to make profits and pursue growth," he added.
Asked about the impact of the implementation of the Basel III standards by the banks, Sheikh Salem said this could weaken the competitive edge of the local banks vis-@-vis regional peers.
As for the performance of the investment companies, he said 40 such companies made robust growth in 2010, 35 others made good performance, and 15 fair while seven were bad, he added.
