As for companies, the concessional financing term according to the scheme was specified as three years, not four as with SMEs. Part of the cost of financing is subsidized where the State shoulders the entire cost for the first year and 50% of the cost for the second year, while the beneficiary has to cover the whole cost for the third. Part Two: guarantee of financing In addition to subsidizing the cost of financing, the scheme proposes a State guarantee of the financing extended to SMEs to incentivize banks to grant financing. The layout is suited to the local economy where the State guarantees 80% of the principal debt but not the cost of financing. Meanwhile, an annual fee of 0.25% is to be paid to the State to reduce banks’ moral hazard and to generate revenue for the government to partially offset the cost of the scheme. The committee proposed a set of controls and restrictions to guarantee that the financing is spent towards the indicated purposes, most importantly: companies refrain from distributing dividends to shareholders while benefiting from the scheme. They must retain the national staff ratio as of 31 December 2019 and work towards satisfying the target ratio for 31 December 2021, relevant to their respective sector. It is worth noting that this guarantee has several advantages for the economy, for banks and economic entities including the following: -  The actual cost to the government to guarantee financing does not exceed one tenth of the overall financing extended to economic entities.
The impact would continue to grow as the crisis persists, since the cash flow crunch would force companies – including those previously in a good liquidity position - to shut down for failure to secure financing; either due to increasing financing costs or the banks’ reluctance to finance amid fears of growing default risk during the crisis. This could lead to companies’ bankruptcies, which, due to the chain effect between economic sectors could thus result in a contraction in non-oil GDP. The Committee’s Mandate To counter the impact and repercussions of the crisis on the national economy, the Higher Steering Committee for Economic Stimulus (The Committee), formed by the Council of Ministers Resolution (455) on 31 March 2020, and chaired by the Governor of the Central Bank of Kuwait, adopted a proactive approach to realize economic stability throughout the crisis. It laid down and initiated economic stimulus measures to prepare for the economic recovery stage that shall  Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  -3-  follow once we overcome this crisis. Immediately afterwards, a national economic and structural reform plan needs to be launched and adopted by all the relevant stakeholders. The Committee listed several measures and governing principles to serve as a framework for all its activities, and they are as follows:  -  -  -  -  Introducing immediate remedies that provide practical and swift solutions to protect the national economy supporting economic reform and best possible resource allocation.