Kuwait's parliament gave initial approval for a massive bailout of indebted citizens worth up to 6.7 billion dinars ($23.39 billion), which the government opposes as too costly, state news agency KUNA said on Thursday. Finance Minister Mustapha Shamali, speaking in parliament, rejected the proposal, saying the government would have to use up 33.5 percent of total deposits, or 2.9 billion dinars to fund the plan.
The initiative is the latest in a series of confrontations between the assembly and the government in the Opec producer. Kuwait's government wrote off all consumer loans after the 1991 Gulf War that ended Iraq's occupation of the small Gulf state but since then has sought to reduce welfare spending. However, in 2008 it caved in to parliament's pressure and increased a state fund aimed at helping citizens to repay consumer loans to $1.9 billion.
The debt bill, which has yet to go through final reading and needs approval from the cabinet and Kuwait's ruler, calls on the government to buy up the citizens loans including interest to the banks. Deputies have a history of challenging the government, unusual in a region of autocratic rulers, and Kuwait's parliament has triggered numerous cabinet resignations or reshuffles. Earlier this month, Kuwait's interior minister survived a non-confidence vote in the assembly.
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