Kuwait’s $5.2 billion stimulus package shores up banks by providing a 15-year guarantee against losses on existing credits and investments — but it won’t stave off economic catastrophe, says Nasser Al-Kharafi, chair-
man of construction and retail group Mohammed Abdul-mohsin Al-Kharafi & Sons Co. and the second-richest man in the Middle East, with a fortune estimated at $8.1 billion.
Al-Kharafi, 65, controls nearly 16 percent of the $43.4 billion-in-assets National Bank of Kuwait, the emirate’s biggest bank, and 10 percent of Global Investment House, the Kuwait investment bank that defaulted on $3 billion in debt in December. “Most Kuwaitis invested in the stock market, and nearly all them have borrowed against investments,” Al-Kharafi tells II. “The govern-ment must now use the billions in oil revenues it has saved buying shares at a premium” to bail out overextended Kuwaitis and restore confidence in the Kuwait Stock Exchange, which is down 52 percent from its peak last June. Otherwise, he predicts a cycle of falling asset prices and defaults.
