Kuwait has introduced a significant stimulus package aimed at banks to enhance lending and mitigate the economic repercussions of the ongoing conflict in Iran.
The Central Bank of Kuwait (CBK) announced the comprehensive measures over the weekend, emphasising the resilience of the banking sector despite recent regional tensions.
Stimulus Introduced
The stimulus includes a temporary adjustment of macro-prudential ratios, notably reducing the minimum liquidity coverage ratio (LCR) and net stable funding ratio from 100% to 80%.
The minimum regulatory ratio has been lowered from 18% to 15%.
Analysts have noted that the primary intent behind this reduction is to infuse liquidity into the financial system, thereby stimulating lending and bolstering economic activity during periods of heightened stress.
Basel III: Regulatory Requirements
The LCR is a Basel III regulatory requirement mandating banks to maintain a sufficient level of high-quality liquid assets, such as cash or government bonds, to withstand a 30-day liquidity crisis.
With total banking sector assets amounting to approximately $420B at the end of 2025, Kuwait’s financial landscape plays a crucial role in the region.
In a separate incident, suspected Iranian missile or drone strikes resulted in the death of an Indian worker and damage to a major power and water desalination plant in Kuwait yesterday.
The electricity and water ministry announced that it had swiftly addressed the aftermath of the attack, via the national news agency.
The Kuwaiti national guard also reported the interception of five drones in protected areas. The Kuwait Petroleum Company revealed that the Mina Al-Ahmadi refinery experienced a drone attack last week, causing multiple units within the facility to catch fire.
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