GCC monetary union unlikely to meet 2010 deadline, says IIF
Emirates Business 24/7 - 26 November, 2009
Four Gulf Arab oil producers planning to establish the Middle East's first monetary union will likely be unable to meet a 2010 deadline for a single currency, according to a key Western financial establishment.
The Washington-based Institute for International Finance (IIF) said Saudi Arabia, Kuwait, Qatar and Bahrain, members of the six-nation Gulf Co-operation Council (GCC), had made substantial progress on key fiscal convergence criteria but have not yet reached agreement on payment systems and other issues.
"The introduction of a single currency for the region, planned for 2010, is expected to be delayed," IIF said in a study. Progress has been made in regional economic integration. GCC economies have largely unrestricted intraregional mobility of goods, labour and capital. Key convergence criteria for establishing the union have been largely achieved. However, little progress has been made in putting the institutional arrangements in place for a functioning single currency (including harmonisation of statistics and development of an efficient payments system)."
IIF, which groups several Western banks, said it expected the UAE and Oman to join the world's second monetary union later. "While four of the six GCC states except Oman and the UAE have signed the agreement, the option is open for these two to join later."
GCC leaders are expected to ratify the union at their annual summit in Kuwait next month although officials have hinted the 2010 deadline could be extended.
Emirates Business 24/7 - 26 November, 2009
Four Gulf Arab oil producers planning to establish the Middle East's first monetary union will likely be unable to meet a 2010 deadline for a single currency, according to a key Western financial establishment.
The Washington-based Institute for International Finance (IIF) said Saudi Arabia, Kuwait, Qatar and Bahrain, members of the six-nation Gulf Co-operation Council (GCC), had made substantial progress on key fiscal convergence criteria but have not yet reached agreement on payment systems and other issues.
"The introduction of a single currency for the region, planned for 2010, is expected to be delayed," IIF said in a study. Progress has been made in regional economic integration. GCC economies have largely unrestricted intraregional mobility of goods, labour and capital. Key convergence criteria for establishing the union have been largely achieved. However, little progress has been made in putting the institutional arrangements in place for a functioning single currency (including harmonisation of statistics and development of an efficient payments system)."
IIF, which groups several Western banks, said it expected the UAE and Oman to join the world's second monetary union later. "While four of the six GCC states except Oman and the UAE have signed the agreement, the option is open for these two to join later."
GCC leaders are expected to ratify the union at their annual summit in Kuwait next month although officials have hinted the 2010 deadline could be extended.