Financing of Kuwaiti imports by local banks sees jump of 31.8%

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KUWAIT CITY, Jan 2: Financing provided to support Kuwaiti imports from local banks has exhibited substantial growth over the 11 months of 2023, demonstrating a notable increase of 31.8% compared to the same period last year. The total financing rose from 7.282 billion dinars during the 11 months of 2022 to an impressive 9.6 billion dinars in the corresponding period of 2023. This robust growth is particularly noteworthy given the challenging economic circumstances experienced globally. However, it is essential to note that despite the impressive year on- year increase, there was a monthly decline of 12.9%, with the financing dropping from 697.5 million dinars at the end of October to 607.4 million dinars at the end of November 2023. This monthly fluctuation underscores the dynamic nature of financial markets and economic activities.

Breakdown by Currency:
1. US Dollars Dominance: Financing provided in US dollars constituted a significant majority, representing 85.17% of the total import financing. This currency experienced a remarkable increase of 34.4% during the 11 months of 2023, reaching 8.178 billion dinars compared to 6.082 billion dinars in the same period of 2022. Despite a 14.6% monthly decline in November to 486.9 million dinars, the overall annual growth is substantial.

2. Other Currencies Contribution: Financing in other currencies occupied the second position, making up 6.3% of the total. This category witnessed a 32.3% increase during the 11 months, totaling 610.7 million dinars. In November alone, there was a 1% rise to 52.3 million dinars.

3. Euros and Other Currencies: Financing provided in euros accounted for 4.3% of the total import financing, although it experienced a 22.1% monthly decline in November to 30.9 million dinars. On an annual basis, there was a decrease of 2.2%, reflecting the volatility in currency markets.

4. Diversification with Dirhams and Riyals: Financing in UAE dirhams represented 1.8% of the total, marking a 16.4% increase to 174.2 million dinars. Simultaneously, financing in Saudi riyals surged by 71.6%, amounting to 127.5 million dinars, contributing about 1.3% to the total financing.

5. Japanese Yen and British Pound: Financing in Japanese yen and the British pound reached 46.2 million dinars and 41.6 million dinars, respectively, showcasing diversified currency support.

Quality of Financing:
The nature of financing also offers valuable insights into the mechanisms employed for supporting imports:

1. Other Payment Orders Dominance: Financing provided through other payment orders claimed the majority, occupying 73.2% of the total financing. This category experienced a notable increase of 38.4% during the 11 months of 2023, amounting to 7.033 billion dinars. Despite a 14.3% monthly decline in November to 426.7 million dinars, the overall growth is substantial.

2. Role of Documentary Credits: Financing through documentary credits contributed 23.5% to the total import financing, witnessing a robust growth of 30.9% during the 11 months, reaching a total of 2.26 billion dinars. However, there was a 10.9% monthly decline in November to 153.8 million dinars.

3. Collection Policies Impact: Financing through collection policies represented 3.1% of the total, with a decrease of 35.5% to 304.9 million dinars during the 11 months of 2023.

However, there was a slight 0.4% monthly increase in November to 26.8 million dinars. In conclusion, the financing landscape for Kuwaiti imports demonstrates resilience and adaptability, showcasing growth and diversification in currency and financing mechanisms. This nuanced analysis provides a comprehensive understanding of the economic dynamics and financial strategies employed to support import activities in Kuwait

By Ahmad Fathi
Al-Seyassah/Arab Times Staff

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