* C.bank seeks to support banking sector and economy
* Ready to take more action as needed
* Stock market, biggest bank have suffered in recent months
(Adds quotes, background)
By Sylvia Westall
KUWAIT, Oct 3 Kuwait's central bank is cutting
its discount rate by 50 basis points to 2 percent to help
bolster the banking sector and support the economy, state news
agency KUNA said late on Wednesday.
The cut, which will take effect from Oct. 4, is the first
move since February 2010, when the bank cut the discount rate by
50 basis points to 2.5 percent, according to Reuters data.
The central bank wants to help create a good atmosphere for
the banking sector and improve the performance of non-oil
sectors of the economy, KUNA said, citing Central Bank Governor
"The central bank continues to follow the latest
developments in the local economy closely and will not hesitate
to take appropriate action to enhance elements of sustainable
growth in various economic sectors," KUNA quoted him as saying.
The decision, cutting the rate the central bank charges
other banks to borrow from it, will help ensure the
competitiveness of the dinar currency, Hashel said. He also
noted a decline in inflationary pressures, KUNA added.
The stock market slumped to an eight-year low in
mid-August, underperforming most other bourses in the Gulf,
largely because of the political situation.
Kuwait has seen 10 governments since early 2006 due to a
long-running political row between the elected parliament and
government, which is dominated by the Al-Sabah ruling family.
In July Kuwait's biggest bank reported a surprise 42 percent
drop in second-quarter profit, which some analysts took as a
sign of the damage being wrought by a political stalemate in the
Gulf Arab state.
The chief executive of National Bank of Kuwait
blasted the country's political deadlock in a rare public
outburst for the region.
The turmoil has held up investment in the OPEC member state
including a 30 billion dinar ($108 billion) economic development
plan aimed at diversifying the heavily oil-reliant economy and
attracting foreign investment.
In some of his first comments to international media, Hashel
said on Monday the government should take all necessary measures
to cut public spending and focus on investing in projects that
will benefit the economy in the long-term.
He said growth would be around 6.5-6.6 percent this year in
Kuwait, one of the world's richest countries per capita thanks
to its oil wealth and small population.
Kuwait booked a record budget surplus of 13.2 billion dinars
($47 billion) in the fiscal year that ended in March thanks to
robust oil income and lower spending than planned, but
economists say it needs to kick start investment in order to
ensure long-term economic stability.
Earlier on Wednesday the cabinet asked Kuwait's ruler to
consider dissolving parliament in a widely expected bid to clear
the way for a new election and end the months of political
(Additional reporting by Andrew Torchia, Editing by Alison