GCC ministers agree on FX union timeframe
Dubai, December 14, 2009
An agreement has been reached on a time frame for the planned Gulf single currency ahead of the crucial Gulf annual summit on Monday, said a report quoting a senior Kuwait official.
'Gulf foreign ministers agreed on a time frame for the planned currency at the end of a early morning meeting set to prepare the agenda for the key summit, Kuwaiti foreign ministry undersecretary Khaled al-Jarallah, was quoted as saying by the official Kuna news agency.
The Gulf monetary union pact is expected to be launched at the summit, senior officials at the summit said.
The ministers are likely to use the meeting to decide the authority and shape of the joint monetary council and debate on whether the common currency will be initially pegged to the dollar or a basket of currencies.
The ministers will also hold discussions on the common Gulf Central Bank, the officials added.
The six-nation bloc has been vying to issue the single currency in 2010 but is way behind schedule owing to several unexpected developments.
The UAE, the second-largest Arab economy, in May dealt a serious blow to the union by pulling out in protest at the decision to locate any joint central bank in Saudi Arabia.
The summit may see Saudi offer concessions for key positions in an attempt to lure the UAE back in the future, said analysts.
Saudi Arabia, Kuwait, Qatar and Bahrain said they were committed to the monetary union plan. 'Monetary union will be weakened but it is also a loss for the UAE because it is losing a competitive advantage of being part of a bloc,' they said.
'And of course the bloc will have more options in terms of monetary policy and fiscal policy that would be more appealing to foreign investors,' they added.
The much smaller Sultanate of Oman had opted out of the plan three years back, saying it was not going to be ready for the 2010 deadline.