“ requirements and challenges of rebuilding banking sector ’ s capital and liquidity margins after lifting stimulus packages ” two years ago today, the world was hit by coronavirus pandemic. repercussions were far - reaching and severe posing challenges not only to the global markets but also the normal life that has been disrupted or almost disrupted. the pandemic had elements of both supply and demand shocks. on the supply side, closures in many economies around the world, and restrictions imposed on travel, gatherings, events and schools, as well as business interruptions led to supply chains disruption that had a negative impact on the growth of the global economy. this, in turn, affected the demand on energy that that witnessed a sharp fall, as brent crude oil plunged to 20 - year low in april 2022 of usd 20 per barrel. the purchasing managers ’ index ( pmi ), concurrently, experienced a sharp decline during the same period reflecting deterioration of the operating environment for companies. in an effort to reduce the negative effects of the spread of the coronavirus pandemic and weather its repercussions and challenges, central banks around the worlds have taken exceptional measures. at the monetary policy level, interest rates have been cut to alltime low levels, reaching zero in some countries, liquidity injected exceptionally into the markets having eased the regulatory requirements to ensure the continued inflows, while fiscal policy stimulated economies by providing financial facilities and aids including payment moratoriums and extending financial aids to the affected segments. the total financial packages provided around the world to various economic sectors ( health and non - health ) amounted to around usd 10. 8 trillion, equivalent to 10. 2 % of the global gdp, while the amounts allocated to support liquidity injected into the economies reached usd 6. 1 trillion, or 6. 2 % of the global gdp. like the other countries in the world, the kuwaiti economy encountered many challenges, as economic activities have been shut down for several months, and global shipping of merchandise goods has been severely disrupted. proceeding from the importance of discussions and sharing of experiences to pave the way towards making the right decisions and bringing about thorough strategies that strengthen the monetary and financial stability, i would like to briefly present the efforts made by the central bank of kuwait to achieve this goal during the previous period, and the measures it have taken to alleviate those challenges and develop a mechanism for follow - up thereon and a plan for safe exit. speech delivered by his excellency the

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. the above indicators unveil the central bank of kuwait ’ s prudent policy and proactive approach that helped banks to weather one of the most difficult economic crises from a position of strength, and continue providing their services efficiently. having considered the positive results and resilience of the banking sector, the central bank of kuwait decided to lift restrictions and lay down a map to redirect its regulatory mitigants to prepandemic thresholds. notwithstanding the banking sector ’ s sound indicators, high liquidity ratio and strong solvency, the estimated liquidity and solvency ratios above the minimum regulatory thresholds, and outlook of healthy growth, the central bank of kuwait decided to gradually unwind the regulatory mitigants in line with the imf recommendations. the first phase of our 2 - phased transition began early 2022 by withdrawing 50 % of the regulatory mitigants. the second phase of withdrawal process shall be completed early 2023 to return to the previous pre - crisis regulatory thresholds. meanwhile, we shall still support small and medium enterprises by maintaining the same risk weight, and closely monitor the performance of the banking sector and conduct stress testing on its various units. though the central bank of kuwait is satisfied of the resilience of the banking and financial sector in the state of kuwait, the developments recently seen in the world and the evolving risks surrounding the prospects of the global economy drive our efforts to protect our economy and banking and financial sectors from external shocks through proper monetary policies and supervisory measures. it is understood