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Volume :12 Issue : 2 2005      Add To Cart                                                                    Download

Re-assessment of Grant Element in Kuwaiti Development Aid: An International Contrastive Approach

Auther : Abbas A. Al-Mejren

This paper provides a statistical reassessment of the grant element in the Kuwaiti development loans over the past four decades. As a replacement for the conventional discount rate that is used by the Kuwaiti Fund for Economic Development as well as other donor institutions to estimate the grant element factor in development assistances, the present article utilizes the series of actual international rates of interest, which had existed over the period of 1962 – 2000, to re-estimate the annual Kuwaiti grant element during that period of time. This assessment measures the Kuwaiti grant element in comparison with a probable opportunity cost-grant element given that recipients have free access to international funds. The paper also compares the Kuwaiti grant element with grant elements provided by international aid association (IDA) of the World Bank to a selected list of 52 recipient countries. It is found that borrowers with low income are more likely to receive a higher grant element from IDA compared with KFED. Yet, compared to numerous IDA funds, the Kuwaiti loans have some immeasurable advantages to borrowers that cannot be incorporated in the grant element formula.

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