Kuwait - Averting financial crisis

Fawzi H. Al-Sultan

No 243, Policy Research Working Paper Series from The World Bank

Abstract: On August 8, 1982 a leaflet was distributed in the Suq Al Manakh building and in the basement of Commercial Center No. 5, the offices of the parallel stock market and the Kuwait Stock Exchange. The leaflet carried the names of most of the dealers in the stock market and it declared a one month moratorium on all payments of maturing future cheques. The moratorium, informal as it was, was respected by the dealers. During the next two years stock market and real estate prices fell more than 50 percent, devastating investors who had bought the underlying assets at future prices. This paper traces the development of Kuwait's financial crisis and describes the interventions devised by the government as events unfolded. The critical question is whether the solutions will reignite Kuwait's nonoil economy and stimulate the participation of the private sector.

Keywords: Economic Theory&Research; Payment Systems&Infrastructure; Financial Intermediation; Banks&Banking Reform; International Terrorism&Counterterrorism (search for similar items in EconPapers)
Date: 1989-07-31
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