ME governments 'ready to shield economies'
Dubai, April 26, 2009
Middle Eastern governments are prepared to step in with more financial support to help their economies weather the financial crisis, the United Arab Emirates central bank governor said.
In a speech delivered to the International Monetary Fund (IMF) on Saturday, Sultan Nasser al-Suweidi also said sovereign and corporate issuers in emerging markets face being 'crowded out' by issuers in developed countries.
His speech was delivered on behalf of Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Maldives, Oman, Qatar, Syria and Yemen.
'Looking ahead, governments stand ready to provide additional support as needed to shield the financial sector and domestic activity from further deterioration in global conditions,' Suweidi said, according to a copy of the speech published on the IMF website.
Regional central banks have slashed interest rates, reduced bank reserve requirements and provided emergency cash to help their banks cope with a global crisis that brought to an end an economic boom in a region dominated by oil exporters.
In addition to large declines in oil prices, deterioration in external financing conditions and reversal of capital flows are dampening growth prospects,' Suweidi said.
Governments in Abu Dhabi, Dubai, Qatar and Bahrain are selling bonds to raise funds as they seek to finance budget deficits and assist companies struggling to cope with an economic downturn.
The Gulf, the world's biggest oil-exporting region, has suffered since oil prices shed almost $100 a barrel since July. The UAE is the world's third-largest oil exporter.
'Emerging market sovereigns and corporates with financing needs further run the risk of being 'crowded out' as mature economies issue and guarantee substantial amounts of net debt in response to the crisis,' Suweidi said.
'Revenues from exports, especially from commodities, tourism, and remittances will be depressed, at a time when deleveraging is raising borrowing costs,' he added.-Reuters