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Kuwait cabinet approves economic stimulus plan

The Kuwaiti cabinet approved on Thursday a multi-billion dollar stimulus plan aimed at protecting the financial system and bailing out a number of troubled investment firms.

The package, which must still be approved by parliament, aims to "safeguard the financial system and stabilise the domestic economy against the fallout of the global economic crisis," a cabinet statement said.

According to earlier media reports, at least four billion dinars ($14 billion) would be allocated to guarantee old and new bank credit facilities to overcome the credit crunch and provide loans to troubled investment firms.

Public funds would be used to provide urgent loans to companies facing a cash flow crisis and guaranteeing bank loans for up to 15 years to ease a credit crunch, the reports said.

The scheme also stipulates that the state purchase toxic assets to shore up the banking sector, the reports said.

Last year, Kuwait guaranteed deposits of all banks operating in the country.

A number of Kuwaiti investment companies have defaulted on loans as credit facilities have become difficult to obtain and the value of their assets has dropped sharply.

Last week, lawmakers urged swift government intervention to rescue the local economy from what they called an imminent collapse.

The plan is due to go before parliament on Tuesday.