Finance ministers and central bankers from the oil-rich Gulf said on
Saturday they expect their economies to continue to grow despite the
global financial crisis and a sharp drop in oil prices.
They said they had already taken steps to deal with the impact of the
global financial crisis but that turmoil on world markets had given new
urgency to their plan for monetary union, AlArabiya TV reported.
The states, preparing for a single currency by an unlikely 2010
deadline, emerged from the meeting with few public statements on how
they would work together.
Policymakers meeting in the Saudi capital, Riyadh, "reaffirmed their
confidence in the stability" of the financial sector of the six-nation
Gulf Cooperation Council (GCC), they said in a statement issued at the
end of the meeting.
underscored the "strength and solvency" of the financial sector in the
Arab states of the Gulf and stressed they can weather any impact from
the global financial crisis, the statement said.
Participants in the meeting "expect Gulf economies to continue to grow
by good levels," it added.
They voiced satisfaction over measures taken in the region to deal with
any impact from the world economic crisis and expressed readiness to
take any additional measures, the statement said.
The main aim for Saturday's GCC meeting was to discuss coordination of
their response to the global downturn that threatens to brake their
region's six-year economic boom.
"The likely effects of the global crisis we can deal with through the
measures we have already taken," Qatari Minister of Finance Youssef
Kamal said after the meeting.
"The crisis proves how much we need a single currency and that a single
central bank should be a supervisory body."
The agenda for the one-day meeting included discussion of new steps to
shore up confidence in their banking sectors while reviewing regional
AlArabiya television reported that Gulf policymakers would discuss
directing more government funds into stocks and bank accounts to bolster
Saudi Arabia, the United Arab Emirates and four other Gulf states have
so far adopted separate policy responses to defrost interbank lending
and boost confidence in their stock markets. The GCC also includes
Qatar, Kuwait, Bahrain and Oman.
Some Gulf states have guaranteed bank deposits, eased lending
restrictions, set up emergency funding facilities for their banks and
invested money in ailing stocks.
The global turmoil has hit the Gulf region after six years of high oil
prices allowed state and private investors to funnel billions of dollars
into industry and infrastructure projects.
Banks are now struggling to finance these projects, leading economists
and policymakers to expect project delays and forecast lower real growth
as the Organization of the Petroleum Exporting Countries (OPEC) cuts
crude oil output.
Crude prices have dropped by more than half since hitting record levels
above $147 a barrel in July, including a fall of almost $4 on Friday
despite an agreement by OPEC to cut output by 1.5 million barrels a day.
Investor confidence in the region has already taken a hit. Saudi
Arabia's bourse plunged more than 8 percent on Saturday, having dropped
more than 44 percent this year.
Stock markets in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the
United Arab Emirates have taken a severe battering this month, losing
some 200 billion dollars.
Fears of a liquidity shortfall have also loomed over Gulf banks because
of the global credit crunch, with the banks having limited ability to
borrow on the international market.
RIYADH (AlArabiya.net, Agencies)