Magazine article Global Finance

Nbk-Kuwait Speeds Ahead

Magazine article Global Finance

Nbk-Kuwait Speeds Ahead

Article excerpt

An oil-price drop can affect banks in two ways, according to Salah AI Fulaij, CEO of NBKKuwait. One is by tightening liquidity in the financial system, as the government has fewer revenues to deposit. The other is by causing the government to cut back on spending. "However, in this instance, we expect the government to stick to its spending plans," AI Fulaij says. "Since the decline in oil prices, the government has declared several times its intent to move forward with its development plan. We have seen large projects being awarded, one after the other. The country needs the infrastructure, and the ability of the government to finance projects is not in question, thanks to massive reserves."

Contractors and subcontractors will require bank credit-along with ancillary financial services-to underwrite their activities. "We anticipate the pace of credit growth to pick up to around 7% in 2016 and 8% in 2017," says AI Fulaij. Meanwhile, he adds, systemic liquidity remains healthy, and the authorities stand ready to address any issues that might arise.

NBK expects Kuwait's non-oil real GDP growth to improve in the next two years to the 4%-to-5% range. To fuel the economy in the longer term, the government is seeking to encourage a more entrepreneurial business culture by nurturing small and medium-size enterprises with several legislative and regulatory initiatives. "While the SME sector in Kuwait remains quite undeveloped, fortunately we are seeing this change in recent months at a rapid pace," AI Fulaij says. …

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