NBK releases economic report on monetary indicators

In its latest economic brief the National Bank of Kuwait attributed the changes in monetary indicators over the past two months to an increase in the sale of shares of the Mobile Telecommunications Company (MTC) and a greater turnover in Kuwait’s stock market.

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By  Massoud Derhally Published  August 21, 2001

In its latest economic brief the National Bank of Kuwait attributed the changes in monetary indicators over the past two months to an increase in the sale of shares of the Mobile Telecommunications Company (MTC) and a greater turnover in Kuwait’s stock market.

Credit facilities showed a healthy increase of 4.6% between May and July, while the year-on-year increase was only 6.3%. Meanwhile, the money supply shrank as funds were withdrawn from the market. KIA share sales mopped up close to KD 165 million of private deposits, while outward transfers of oil revenues held in foreign currency deposits with local banks took out an even larger amount from the system.

Bank liquidity system-wide remained abundant even though individual banks showed varying degrees of liquidity in their mid year reports. The ratio of liquid to consolidated total assets reached historically high levels. The withdrawal of funds from the system caused a pause in the downward trend in average interest rates on customer time deposits that started almost a year ago.

The money supply (M2) remained fairly stable in July after contracting for three consecutive months. The cumulative drop in M2 during the second quarter was 3.8% or KD 339 million, wiping out almost a third of the growth registered in the previous two quarters. The drop in June alone was 2%.

A halt in the distribution of UN compensation payments for losses due to the Iraqi invasion and outward transfers of oil receipts held in foreign currency deposits were responsible for the contraction. Still, M2 is up 4.6% so far this year and 7.1% against a year ago, reflecting the continued liquidity of the system.

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