Kuwait launches stimulus package for banks

• Aims to offset damage from Iran war
• Will help lending to households
• Worker killed at desalination plant

Kuwait has unveiled a major stimulus package for banks to spur lending and offset economic damage caused by the US-Israel conflict with Iran.

In a statement at the weekend, the Central Bank of Kuwait (CBK) said it has launched a wide ranging stimulus package for banks, saying that the sector has remained strong despite weeks of regional hostilities.

The measures include a temporary easing of macro-prudential ratios, with a minimum liquidity coverage ratio (LCR) and net stable funding ratio reduced from 100 percent to 80 percent. The minimum regulatory ratio was also cut from 18 percent to 15 percent.

“The key feature of these measures is the reduction of LCR. Central banks normally reduce this ratio primarily to inject liquidity into the financial system, stimulate lending and support economic activity during periods of stress,” said Ali Al-Anzi, manager of the Kuwaiti-based Al-Manakh economic consultancy centre.

“I think this will encourage Kuwaiti banks to increase lending to households and businesses with the central bank support,” he told AGBI.

LCR is a Basel III regulatory standard requiring banks to hold enough high quality liquidity (HQLA) – such as cash or government bonds – to survive a 30-day “run on a bank” or liquidity stress scenario. 

Kuwait, a founding Opec member, has one of the largest banking sectors in the region, with assets of around $420 billion at the end of 2025, according to CBK.

Separately, suspected Iranian missile or drone strikes killed an Indian worker and damaged a service building at a major power and water desalination plant in Kuwait late on Sunday.

Kuwait’s electricity and water ministry said in a post on X via the national news agency that it had “immediately dealt” with the repercussions of the incident at the unnamed facility.

Additionally, the Kuwaiti national guard said on Monday it had intercepted five drones “in areas under its protection”.

Last week Kuwait Petroleum Company said that the Mina Al-Ahmadi refinery came under drone attack, resulting in a fire in several units within the complex.

Further reading:

• Kuwait Petroleum expects to reach full capacity in 4 months post-war
• Repair cost for war-hit Middle East energy assets seen at $25bn
• Kuwait seeks public help to curb financial crimes