The Central Bank of Kuwait formulated a set of goals to curb the crisis repercussions and ensure business continuity, support the crucial sectors, and prevent the short-term liquidity crisis from turning into a solvency crisis. Having launched a package of anti-crisis measures, the Central Bank of Kuwait maintained its vigilant monitoring of the local and global economic developments, oversight over the banking sector and monitoring its financial soundness indicators. The sector's results revealed that some banks took advantage of the mitigants to practice their business comfortably without any pressures as a result of the crisis. Development of a plan to exit the stimulus environment easily and smoothly was just as important as measures required to contain the economic pressures. Therefore, the Central Bank of Kuwait maintained a mechanism to evaluate the results of the measures and action it had taken, prepare studies, develop scenarios and conduct stress testing for analyzing banks’ sensitivity and early detecting imbalances, potential vulnerabilities and the optimal ways for remedy. Page 2 of 4  By the end of the third quarter of 2021, the results of the evaluation mechanism revealed improved economic conditions and gradual recovery of the banking sector and its ability to comply with previous regulatory standards. Data of the Kuwaiti banking sector demonstrate that the sector maintains strong capital buffers above the minimum threshold, as Capital Adequacy Ratio (CAR) was 18.5% and Net Stable Financing Ratio (NSFR) swelled to 111%, while the non-performing loans ratio decreased to 1.9%. overall, the sector’s recorded net profits touched the pre-pandemic levels.

It is understood that the previous mitigants and supporting measures taken by central banks, including the Central Bank of Kuwait, are were to survive coronavirus induced health/economic crisis, and had been unwound once they were no longer needed. The challenges and risks seen today differ from those we experienced during the past two years, and require attention, monitoring of their impacts on our economy and banking and financial sectors, and applying the appropriate measures and policies to face them. Among such risks is deceleration of the global economic growth. IMF forecasts in July indicated a decline in growth to 3.2% in 2022 and 2.9% in 2023, driven by several shocks, most notably is deceleration of the American and Chinese economies, Russian-Ukrainian conflict, the geopolitical risks in Southeast Asia, the elevating tensions between China and Taiwan, continued supply and demand imbalance as a result of disruption of supply Page 3 of 4  chains of many basic commodities (mainly food and energy), risks of the continuous rise in global commodity prices and decade-old high inflation rates, especially in USA and major European economies. To contain the prolonged and far-reaching rise in inflation rates, many central banks tightened their monetary policies, by withdrawing the stimulus packages they had taken to withstand the negative impacts of the pandemic, reduced asset purchase programs, and increased interest rates. Such actions are expected to result in inevitable economic costs and we, however, hope that these would not adversely affect our economic sectors, banking and finance in particular.