Kuwait's cabinet approved a new rescue plan to shore up confidence in the economy that includes state guarantees for banks and "ways to help troubled firms", the cabinet said.

"The cabinet has approved the draft law in its final form and .... decided to send it to parliament," the cabinet said after a meeting in a statement.

Parliament is expected to debate the package on Tuesday, when deputies are due to discuss the impact of the financial crisis on the Opec member.

The draft law, which seeks to reinforce financial stability in the country, includes articles on state guarantees to banks and ways to help troubled firms, the cabinet said without elaborating.

"The bill includes guarantees to safeguard public funds and stipulates deterrent criminal penalties for whoever deliberately conceals facts or misleads public entities or forges company data to make gains... from this law," added the statement.

The government is facing increasing pressure from MPs to support troubled investment firms, which make up more than half of the country's listed companies and have borrowed heavily to finance expansions during an oil boom in the past few years.

Top investment firm Global Investment House shocked the market last month by saying it had defaulted on most of its debt, while Islamic firm Investment Dar said it is seeking up to $1 billion in loans to refinance its debt.

Last year, Kuwait had to rescue its fourth-largest lender, Gulf Bank, after it was hit by derivatives losses, with the country's sovereign wealth fund, the Kuwait Investment Authority (KIA), becoming a major shareholder.

Kuwait has already guaranteed bank deposits to boost confidence and allowed KIA to pump more cash into the bourse, which fell 38 percent in 2008. - Reuters