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Kuwait reopens controversial debt takeover scheme
March 12, 2014, 1:27 pm

Kuwait has reopened a controversial fund to pay for citizens’ debts accrued in the lead up to the global financial crisis.

Kuwaitis will have another three months to submit their applications to have loans with a local bank taken over by the government in a scheme economists have warned is unsustainable.

More than 18,000 people with debts totalling KD122 million ($433m) took up the offer when the fund opened early last year.

It involves the government buying out the bank loans, writing off the interest and rescheduling payments. It applies to loans taken out prior to April 1, 2008.

A year ago the Kuwait Central Bank estimated the move would cost KD1.7bn.

Some lawmakers had argued the scheme was unfair to citizens who did not have debts and called for them to also received KD1000 to make up for the public spending on others’ loans.

Kuwaitis are accustomed to financial handouts. In 2011, to mark three major anniversaries, ruler Sheikh Sabah Al Ahmad Al Sabah granted KD1000 to each of the country's 1.2m citizens and free food rations for 13 months.

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