KUWAIT - The Kuwaiti government reported that the value of assets managed by the General Investment Authority in the state’s sovereign wealth fund declined US$31 billion since March 2008 when the fund was worth US$198 billion.
National Assembly Deputy Walid Al-Tabtaba’i attributed the losses to the huge sums the Authority invested in U.S. banks such as Citigroup and Merrill Lynch before the financial meltdown led to the collapse of the two giant investment houses.
Despite the size of the losses sustained, Al-Tabtaba’i suggested it was possible the losses might be mitigated given that they are long term investments and the Kuwaiti government has no plans to sell them in the short term.
Kuwait has been severely criticised by local and regional economists for its excessive dependence on oil revenues and the lack of investment in the development of the manufacturing and tourist sectors, which Kuwait will need when its petroleum reserves are exhausted.
Abdel Wahed Al-Awdi, chairman of the National Assembly Finance Committee expressed confidence that Kuwait was a small country and can survive this crisis. He said it was important to implement the US$17 billion economic stimulus plan recently unveiled by the government, which is aimed at providing liquidity for local financial institutions and other financially strapped private sector companies to enable them to stay in business. The government would be compensated for its timely action once stability returns, he said.
After sanctioning the stimulus plan, the government released a statement saying it had discussed “the establishment of financial and economic stability in the country to complement action taken by the Kuwaiti Central Bank to limit the negative side effects of the global crisis on the country’s banking and financial and economic systems generally and to prevent any systemic crises.”