Qatar urges GCC to bridge currency rifts
Web posted at: 2/26/2008 4:38:34
Source ::: AFP
DOHA • The Prime Minister and Foreign Minister H E Sheikh Hamad bin Jassem bin Jabor Al Thani urged Gulf states to bridge differences over a single currency, saying monetary union could avert possible unilateral revaluations designed to check soaring inflation.
Qatar's dollar-pegged riyal is undervalued by as much as 30 percent and currency revaluation is being studied, among several options, to check inflation, Sheikh Hamad bin Jassem said. Inflation hit 13.74 percent in the fourth quarter. "It's now the time for the Gulf to have its own currency," Sheikh Hamad bin Jassem said. "We are thinking about it and in talks ... we are discussing with Gulf countries, but there is no consensus."
Qatar would prefer to make any change to its currency policy in concert with its Gulf partners preparing for monetary union as early as 2010, the Prime Minister said.
"We prefer always to act with all the GCC countries," said Sheikh Hamad bin Jassem. Qatar currently chairs the six-nation Gulf Cooperation Council.
Asked how long Qatar could continue with its existing foreign exchange regime, he said: "We cannot give a time. It is something that we have to see how it goes and look at where the dollar is going."
Rifts in Gulf monetary policy widened in May when Kuwait broke ranks with its neighbours by severing its dollar peg in favour of a basket of currencies, saying a weak dollar was driving imported inflation.
Oman has said it will not join a single currency at all, and United Arab Emirates Central Bank Governor Sultan Nasser Al Suweidi said in November he was under mounting social and economic pressure to drop the peg.
Drop the peg: Greenspan
ABU DHABI • Former US Federal Reserve chairman Alan Greenspan yesterday advised Gulf states whose currencies are pegged to the US dollar to float their currencies as a means to curb inflation. "I actually think floating is better than fixing or revaluation" of the exchange rate against the flagging dollar, he told a corporate leadership forum in the United Arab Emirates.
Wednesday, March 26, 2008
Tuesday, March 25, 2008
Study on single currency deadline due this year
Study on single currency deadline due this year
by Joel Bowman on Monday, 24 March 2008 The GCC is due to complete a study into the feasibility of establishing a monetary union by the current 2010 deadline by the end of this year, its secretary-general said on Sunday.
“We are carrying out a study now to see what results we will have by the end of the year,” Abdul Rahman Al Attiyah said, quoted newswire Bloomberg.
Gulf leaders requested the study in December at annual GCC summit in Doha, despite publicly backing the deadline.
At the end of the summit leaders issued a communiqué that said the GCC remained committed to a 2010 target date for establishing a GCC monetary union and single currency - something analysts regard this as almost impossible.
UAE daily Emirates Business 24/7 reported in January that Gulf leaders asked ministers and central bank governors to come up with a new date and timeframe for establishing the monetary union at the summit, citing official documents.
The deadline has been in question ever since Oman said in 2006 it would not join in 2010 over concerns that spending targets could constrain economic growth.
The deadline received another blow in May last year when Kuwait broke ranks with its neighbours and depegged its currency from the dollar, citing the dollar's slide against other currencies as one of the factors fuelling inflation.
GCC members had agreed to peg their currencies to the dollar as part of preparations for the eventual introduction of a single currency.
Record inflation across the Gulf has piled pressure on central banks to follow Kuwait's lead, raising further concerns over the introduction of the monetary union.
A report released by investment bank Morgan Stanley in February said the 2010 target date was highly unlikely, adding that GCC members were more likely to revalue their currencies unilaterally.
Analysts have predicted the UAE and Saudi may break ranks from the GCC’s declared schedule for establishing a common currency and "go it alone", with other states joining at a later date.
by Joel Bowman on Monday, 24 March 2008 The GCC is due to complete a study into the feasibility of establishing a monetary union by the current 2010 deadline by the end of this year, its secretary-general said on Sunday.
“We are carrying out a study now to see what results we will have by the end of the year,” Abdul Rahman Al Attiyah said, quoted newswire Bloomberg.
Gulf leaders requested the study in December at annual GCC summit in Doha, despite publicly backing the deadline.
At the end of the summit leaders issued a communiqué that said the GCC remained committed to a 2010 target date for establishing a GCC monetary union and single currency - something analysts regard this as almost impossible.
UAE daily Emirates Business 24/7 reported in January that Gulf leaders asked ministers and central bank governors to come up with a new date and timeframe for establishing the monetary union at the summit, citing official documents.
The deadline has been in question ever since Oman said in 2006 it would not join in 2010 over concerns that spending targets could constrain economic growth.
The deadline received another blow in May last year when Kuwait broke ranks with its neighbours and depegged its currency from the dollar, citing the dollar's slide against other currencies as one of the factors fuelling inflation.
GCC members had agreed to peg their currencies to the dollar as part of preparations for the eventual introduction of a single currency.
Record inflation across the Gulf has piled pressure on central banks to follow Kuwait's lead, raising further concerns over the introduction of the monetary union.
A report released by investment bank Morgan Stanley in February said the 2010 target date was highly unlikely, adding that GCC members were more likely to revalue their currencies unilaterally.
Analysts have predicted the UAE and Saudi may break ranks from the GCC’s declared schedule for establishing a common currency and "go it alone", with other states joining at a later date.
Monday, March 24, 2008
Experts fear overheating in region's property market
Experts fear overheating in region's property market
By Suzanne Fenton, Staff Reporter
Published: March 20, 2008, 23:54
Dubai: The property market in the region is in danger of becoming overstretched, industry officials, whose remarks were given on condition of anonymity, said at a recent conference in Dubai.
"If the costs get too high, Dubai won't be so attractive," the chief executive of a real estate project development in Oman said.
Dubai's real estate transactions were worth $18 billion in 2006, and current estimates show a staggering $158 billion is invested in the sector just in Dubai.
A Financial Times survey has said Dubai is 'at the cutting edge' of world property markets, with average property values rocketing by 150 per cent in the last two years. In contrast, the UK's property value increased by 240 per cent over ten years.
A UAE-based developer said, "There's a lot of pent-up capital looking closely at this region, but returns will be crushed based on escalating costs."
Over the last two years, Dubai has seen rental costs for premium office space more than double, with prices hitting $1,172 per square metre in some cases. In 2005, this figure was about $538.
The main driver behind Dubai's property boom is the ever-increasing population, expected to reach 1.9 million in 2010. Low-cost property, costing Dh500 per square foot, is in high demand, but owing to soaring costs of materials, investment in this sector is losing its appeal.
Soaring construction costs are threatening many projects into being delayed, which is a concern to investors and developers alike.
Some developers are even buying back their own stock as they can't afford to continue construction. A Dubai-based developer agreed that "in the last three months, there has been a marked increase in partly finished buildings being sold off."
A managing director for an international consultancy firm said, "The problem in Dubai is that there are a lot of inexperienced developers, and they are building too much, too quickly and it just can't be sustained."
By Suzanne Fenton, Staff Reporter
Published: March 20, 2008, 23:54
Dubai: The property market in the region is in danger of becoming overstretched, industry officials, whose remarks were given on condition of anonymity, said at a recent conference in Dubai.
"If the costs get too high, Dubai won't be so attractive," the chief executive of a real estate project development in Oman said.
Dubai's real estate transactions were worth $18 billion in 2006, and current estimates show a staggering $158 billion is invested in the sector just in Dubai.
A Financial Times survey has said Dubai is 'at the cutting edge' of world property markets, with average property values rocketing by 150 per cent in the last two years. In contrast, the UK's property value increased by 240 per cent over ten years.
A UAE-based developer said, "There's a lot of pent-up capital looking closely at this region, but returns will be crushed based on escalating costs."
Over the last two years, Dubai has seen rental costs for premium office space more than double, with prices hitting $1,172 per square metre in some cases. In 2005, this figure was about $538.
The main driver behind Dubai's property boom is the ever-increasing population, expected to reach 1.9 million in 2010. Low-cost property, costing Dh500 per square foot, is in high demand, but owing to soaring costs of materials, investment in this sector is losing its appeal.
Soaring construction costs are threatening many projects into being delayed, which is a concern to investors and developers alike.
Some developers are even buying back their own stock as they can't afford to continue construction. A Dubai-based developer agreed that "in the last three months, there has been a marked increase in partly finished buildings being sold off."
A managing director for an international consultancy firm said, "The problem in Dubai is that there are a lot of inexperienced developers, and they are building too much, too quickly and it just can't be sustained."
AL ATTIYAH SAYS BAHRAIN WILL BENEFIT MOST FROM THE GCC COMMON MARKET
AL ATTIYAH SAYS BAHRAIN WILL BENEFIT MOST FROM THE GCC COMMON MARKET
date: 23 03, 2008
MANAMA, MARCH 23, (BNA)--BAHRAIN WILL BE PARTICULARLY THE BIGGEST BENEFICIARY OF ALL THE GCC COUNTRIES FROM THE LAUNCH OF THE GCC COMMON MARKET THANKS TO ITS OPEN ECONOMY, EXPERIENCE AND PASSED LEGISLATION, GCC SECRETARY GENERAL ABDULRAHMAN BIN HAMAD AL ATTIYAH AFFIRMED TODAY IN A SPEECH GIVEN AT A MEETING HELD BY BAHRAIN CHAMBER OF COMMERCE AND INDUSTRY (BCCI) ON THE COMMON MARKET.
HE URGED TO SPEED UP LEGISLATION IN THE GCC COUNTRIES TO GIVE A PUSH TO THE GCC COMMON MARKET, EXPRESSING HOPE TO ACHIEVE A MONETARY UNION AND THE COMMON GCC CURRENCY IN LINE WITH THE RECOMMENDATIONS OF 2001 GCC SUMMIT IN MUSCAT AND THE LATEST SUMMIT IN DOHA.
AL ATTIYAH UNDERLINED KUWAITS COMMITMENT TO THE MONETARY UNION PROJECT WHILE OMAN, HE SAID, WOULD JOIN WHEN APPROPRIATE ACCORDING TO ITS ECONOMIC SITUATION.
HE ALSO CALLED FOR TRUE PARTNERSHIP BETWEEN THE GCC SECRETARIAT GENERAL AND THE CHAMBERS OF COMMERCE AND INDUSTRY IN THE GCC COUNTRIES TO ACTIVATE THE GCC COMMON MARKET AND TRANSLATE IT INTO A REALITY.
ON HIS PART, MINISTER OF INDUSTRY AND COMMERCE DR.
HASAN ABDULLAH FAKHRO STRESSED IN A SPEECH, DELIVERED ON HIS BEHALF BY UNDERSECRETARY FOR COMMERCIAL AFFAIRS DR.
ABDULLAH AL MANSOUR, THE KEY ROLE PLAYED BY THE PRIVATE SECTOR IN THE ECONOMIC AND SOCIAL DEVELOPMENT PROCESS TAKING PLACE IN BAHRAIN AND THE GCC STATES AT LARGE, UNDERLINING THE NEED TO INVOLVE THIS VITAL SECTOR IN THE ECONOMIC DECISION-MAKING PROCESS, NOTABLY AFTER THE LAUNCH OF THE GCC COMMON MARKET.
THE MINISTER HIGHLIGHTED THE MULTIPLE ECONOMIC, COMMERCIAL AND INVESTMENT OPPORTUNITIES TO BE GENERATED BY THE GCC COMMON MARKET FOR ESTABLISHMENTS AND INDIVIDUALS THANKS TO A FREE COMMODITY EXCHANGE, FREELANCE EXCHANGE OF SERVICES, EASY CAPITAL TRANSFER AND LABOUR FORCE MOBILITY.
DR.
FAKHRO URGED THE PRIVATE SECTOR TO ENHANCE ITS PARTICIPATION IN THE DEVELOPMENT PROCESS IN THE COMING PHASE AND EXPAND ITS INVESTMENTS IN ALL FIELDS.
WITHIN THE SAME CONTEXT, CHAIRMAN OF THE UNION OF GCC CHAMBERS OF COMMERCE DR.
ISSAM ABDULLAH FAKHRO CALLED ON THE GOVERNMENT AND PRIVATE SECTORS TO JOIN EFFORTS IN ACTIVATING THE RESOLUTIONS ISSUED BY THE GCC SUPREME COUNCIL WHICH SEEK TO ACHIEVE FULL GCC ECONOMIC CITIZENSHIP AND GET RID OF BUREAUCRACY WHICH MAY UNDERMINE THE COMMON MARKET AND IMPAIR ITS IMPLEMENTATION MECHANISMS.
HE STRESSED THE IMPORTANCE OF EFFECTIVE PARTNERSHIP BETWEEN THE GCC CHAMBERS OF COMMERCE AND GOVERNMENTS THROUGH THE EFFORTS OF THE MINISTERIAL AND TECHNICAL COMMITTEES.FAKHRO SAID THAT THE GCC HAS TAKEN A MAJOR STEP IN THE TRACK OF ITS ECONOMIC PROGRESS BY LAUNCHING THE JOINT MARKET.
HE LOOKED FORWARD TO REACHING COMPLETE ECONOMIC UNITY BY ISSUING A UNIFIED CURRENCY.
FACTORS CONTRIBUTING TO THE SUCCESS OF THE CURRENCY ARE NOW AVAILABLE MORE THAN ANY OTHER TIME AFTER THE LAUNCH OF THE JOINT MARKET, HE SAID.
FAKHRO POINTED OUT TO THE IMPORTANCE OF LOOKING AT THE JOINT GCC MARKET AS THE CORE OF A JOINT ARAB MARKET.
ON HIS PART, FEDERATION OF GCC CHAMBERS OF COMMERCE SECRETARY GENERAL ABDUL RAHEEM NAQI OUTLINED SOME OF THE INDICATORS RELATED TO THE LIBERATION OF PRODUCTS INVESTMENTS AMONG GCC STATES AND THE ROLE THAT THE JOINT MARKET COULD HAVE IN INCREASING THE EXCHANGE OF TRADE AND INVESTMENT AMONG THEM.
THE NUMBER OF JOINT GCC PROJECTS REACHED AROUND 1,000, HE SAID, NOTING THAT THE SUM OF THEIR CAPITAL DID NOT EXCEED USD205 BILLION IN 2005.
ON THE OTHER HAND, JOINT-STOCK COMPANIES ALLOWING GULF CITIZENS TO TRADE IN THEIR SHARES REACHED 524 OUT OF A TOTAL OF 1,000 COMPANIES, HE SAID.
ACCORDING TO NAQI, THERE ARE ONLY 16 BRANCHES OF GULF BANKS IN COUNCIL MEMBER COUNTRIES.
THE NUMBER OF GCC CITIZENS OWNING PROPERTY IN OTHER GCC STATES DID NOT EXCEED 34,000, HE NOTED.
THE SIZE OF TRADE EXCHANGE AMONG GCC COUNTRIES ONLY REACHED 10 PER CENT OF THE TOTAL OF EXCHANGE IN THE AREA, HE ADDED.
WITH THE JOINT MARKET, HE SAID, THE RATE IS EXPECTED TO MORE THAN DOUBLE, ACCORDING TO ESTIMATIONS.
A SIGNIFICANT SHARE OF GCC INVESTMENTS ABROAD, WORTH AROUND USD 1 TRILLION, COULD ALSO BE FORWARDED TO THE ECONOMIES OF COUNCIL COUNTRIES INSTEAD, HE SAID.
THE MEETING ALSO COVERED VARIOUS ASPECTS RELATED TO THE LAUNCH OF THE GCC JOINT MARKET.
IT DISCUSSED THE MEANS OF ACHIEVING GCC ECONOMIC CITIZENSHIP THROUGH THE POTENTIALS MADE AVAILABLE BY THE MARKET.
THIS COULD BE DONE BY FAMILIARIZING BUSINESSMEN AND VARIOUS ECONOMIC SECTORS WITH THE RULES AND REGULATIONS RELATED TO GCC ECONOMIC CITIZENSHIP.
NTQ/MT 23-MAR-2008 19:18
date: 23 03, 2008
MANAMA, MARCH 23, (BNA)--BAHRAIN WILL BE PARTICULARLY THE BIGGEST BENEFICIARY OF ALL THE GCC COUNTRIES FROM THE LAUNCH OF THE GCC COMMON MARKET THANKS TO ITS OPEN ECONOMY, EXPERIENCE AND PASSED LEGISLATION, GCC SECRETARY GENERAL ABDULRAHMAN BIN HAMAD AL ATTIYAH AFFIRMED TODAY IN A SPEECH GIVEN AT A MEETING HELD BY BAHRAIN CHAMBER OF COMMERCE AND INDUSTRY (BCCI) ON THE COMMON MARKET.
HE URGED TO SPEED UP LEGISLATION IN THE GCC COUNTRIES TO GIVE A PUSH TO THE GCC COMMON MARKET, EXPRESSING HOPE TO ACHIEVE A MONETARY UNION AND THE COMMON GCC CURRENCY IN LINE WITH THE RECOMMENDATIONS OF 2001 GCC SUMMIT IN MUSCAT AND THE LATEST SUMMIT IN DOHA.
AL ATTIYAH UNDERLINED KUWAITS COMMITMENT TO THE MONETARY UNION PROJECT WHILE OMAN, HE SAID, WOULD JOIN WHEN APPROPRIATE ACCORDING TO ITS ECONOMIC SITUATION.
HE ALSO CALLED FOR TRUE PARTNERSHIP BETWEEN THE GCC SECRETARIAT GENERAL AND THE CHAMBERS OF COMMERCE AND INDUSTRY IN THE GCC COUNTRIES TO ACTIVATE THE GCC COMMON MARKET AND TRANSLATE IT INTO A REALITY.
ON HIS PART, MINISTER OF INDUSTRY AND COMMERCE DR.
HASAN ABDULLAH FAKHRO STRESSED IN A SPEECH, DELIVERED ON HIS BEHALF BY UNDERSECRETARY FOR COMMERCIAL AFFAIRS DR.
ABDULLAH AL MANSOUR, THE KEY ROLE PLAYED BY THE PRIVATE SECTOR IN THE ECONOMIC AND SOCIAL DEVELOPMENT PROCESS TAKING PLACE IN BAHRAIN AND THE GCC STATES AT LARGE, UNDERLINING THE NEED TO INVOLVE THIS VITAL SECTOR IN THE ECONOMIC DECISION-MAKING PROCESS, NOTABLY AFTER THE LAUNCH OF THE GCC COMMON MARKET.
THE MINISTER HIGHLIGHTED THE MULTIPLE ECONOMIC, COMMERCIAL AND INVESTMENT OPPORTUNITIES TO BE GENERATED BY THE GCC COMMON MARKET FOR ESTABLISHMENTS AND INDIVIDUALS THANKS TO A FREE COMMODITY EXCHANGE, FREELANCE EXCHANGE OF SERVICES, EASY CAPITAL TRANSFER AND LABOUR FORCE MOBILITY.
DR.
FAKHRO URGED THE PRIVATE SECTOR TO ENHANCE ITS PARTICIPATION IN THE DEVELOPMENT PROCESS IN THE COMING PHASE AND EXPAND ITS INVESTMENTS IN ALL FIELDS.
WITHIN THE SAME CONTEXT, CHAIRMAN OF THE UNION OF GCC CHAMBERS OF COMMERCE DR.
ISSAM ABDULLAH FAKHRO CALLED ON THE GOVERNMENT AND PRIVATE SECTORS TO JOIN EFFORTS IN ACTIVATING THE RESOLUTIONS ISSUED BY THE GCC SUPREME COUNCIL WHICH SEEK TO ACHIEVE FULL GCC ECONOMIC CITIZENSHIP AND GET RID OF BUREAUCRACY WHICH MAY UNDERMINE THE COMMON MARKET AND IMPAIR ITS IMPLEMENTATION MECHANISMS.
HE STRESSED THE IMPORTANCE OF EFFECTIVE PARTNERSHIP BETWEEN THE GCC CHAMBERS OF COMMERCE AND GOVERNMENTS THROUGH THE EFFORTS OF THE MINISTERIAL AND TECHNICAL COMMITTEES.FAKHRO SAID THAT THE GCC HAS TAKEN A MAJOR STEP IN THE TRACK OF ITS ECONOMIC PROGRESS BY LAUNCHING THE JOINT MARKET.
HE LOOKED FORWARD TO REACHING COMPLETE ECONOMIC UNITY BY ISSUING A UNIFIED CURRENCY.
FACTORS CONTRIBUTING TO THE SUCCESS OF THE CURRENCY ARE NOW AVAILABLE MORE THAN ANY OTHER TIME AFTER THE LAUNCH OF THE JOINT MARKET, HE SAID.
FAKHRO POINTED OUT TO THE IMPORTANCE OF LOOKING AT THE JOINT GCC MARKET AS THE CORE OF A JOINT ARAB MARKET.
ON HIS PART, FEDERATION OF GCC CHAMBERS OF COMMERCE SECRETARY GENERAL ABDUL RAHEEM NAQI OUTLINED SOME OF THE INDICATORS RELATED TO THE LIBERATION OF PRODUCTS INVESTMENTS AMONG GCC STATES AND THE ROLE THAT THE JOINT MARKET COULD HAVE IN INCREASING THE EXCHANGE OF TRADE AND INVESTMENT AMONG THEM.
THE NUMBER OF JOINT GCC PROJECTS REACHED AROUND 1,000, HE SAID, NOTING THAT THE SUM OF THEIR CAPITAL DID NOT EXCEED USD205 BILLION IN 2005.
ON THE OTHER HAND, JOINT-STOCK COMPANIES ALLOWING GULF CITIZENS TO TRADE IN THEIR SHARES REACHED 524 OUT OF A TOTAL OF 1,000 COMPANIES, HE SAID.
ACCORDING TO NAQI, THERE ARE ONLY 16 BRANCHES OF GULF BANKS IN COUNCIL MEMBER COUNTRIES.
THE NUMBER OF GCC CITIZENS OWNING PROPERTY IN OTHER GCC STATES DID NOT EXCEED 34,000, HE NOTED.
THE SIZE OF TRADE EXCHANGE AMONG GCC COUNTRIES ONLY REACHED 10 PER CENT OF THE TOTAL OF EXCHANGE IN THE AREA, HE ADDED.
WITH THE JOINT MARKET, HE SAID, THE RATE IS EXPECTED TO MORE THAN DOUBLE, ACCORDING TO ESTIMATIONS.
A SIGNIFICANT SHARE OF GCC INVESTMENTS ABROAD, WORTH AROUND USD 1 TRILLION, COULD ALSO BE FORWARDED TO THE ECONOMIES OF COUNCIL COUNTRIES INSTEAD, HE SAID.
THE MEETING ALSO COVERED VARIOUS ASPECTS RELATED TO THE LAUNCH OF THE GCC JOINT MARKET.
IT DISCUSSED THE MEANS OF ACHIEVING GCC ECONOMIC CITIZENSHIP THROUGH THE POTENTIALS MADE AVAILABLE BY THE MARKET.
THIS COULD BE DONE BY FAMILIARIZING BUSINESSMEN AND VARIOUS ECONOMIC SECTORS WITH THE RULES AND REGULATIONS RELATED TO GCC ECONOMIC CITIZENSHIP.
NTQ/MT 23-MAR-2008 19:18
Rise in food prices puts pressure on fiscal policy
Rise in food prices puts pressure on fiscal policy
By Nadim Kawach on Friday, March 21 , 2008
A surge in global food prices has put pressure on the fiscal balance of Gulf oil producers and complicated their efforts to stem inflation given their heavy reliance on farm imports, according to official data.
Without heavy government subsidies, higher food prices will remain a key factor in soaring inflation rates in the Gulf Co-operation Council (GCC) along with a surge in rents, high public spending and excessive domestic liquidity.
Official figures showed food prices have jumped by four to 10 per cent in the GCC over the past three years mainly as a result of soaring farm costs in many countries that are considered a key source for GCC food supplies.
“Over the past year, prices of some food products have risen substantially. For many economies, food represents a significant share of export receipts or import payments. Thus, higher food prices can have a significant impact on a country’s net trade balances,” the International Monetary Fund said.
It said some food-exporting countries in the Western Hemisphere – such as Argentina, Bolivia, and Chile – and in southern Africa – such as South Africa, Namibia, and Swaziland – have benefited from higher food prices since 2002.
However, many of the poorer regions of Africa and a number of countries in Asia as well as in the Middle East are net losers, the IMF said in a study.
Higher global food prices put upward pressure on the cost of living, both directly and through their potential impact on non-food prices. Average domestic food price inflation [defined as the purchasing-power-parity weighted aggregate of an individual country’s domestic food price inflation] rose to about 4.5 per cent in the first four months of 2007 from about three per cent over the same period in 2006. The figure is more than nine per cent for developing countries.
Experts said the surge in food prices constituted a major obstacle for the GCC’s efforts to tackle inflation as farm imports account for a large part of the group’s total imports. The foodstuff’s relative weight in the consumer price index (CPI) in some members is as high as 25 per cent, which means any increase in food prices will have a heavy impact on total inflation.
In Saudi Arabia, by far the largest and most populous GCC member, food prices surged by 5.6 per cent in 2006 and 7.1 per cent in 2007.
The increase, along with a steady rise in rents and prices of other items, increased the Kingdom’s inflation rate to its highest annual average of 4.1 per cent in 2007.
The continuous increase in food prices in Saudi Arabia, the world’s top oil exporter, has given rise to smuggling of some foodstuffs and manipulation by traders to influence prices and net higher profits.
On Wednesday, the official media reported that Saudi Arabia’s new Trade Minister Abdullah Zainal formed a committee to study the price increase after meeting representatives of food traders.
He said the committee would consider measures to halt smuggling and manipulation and curb price increases. In the UAE, the largest importer in the Middle East, food prices soared by 5.5 per cent in 2006 and eight per cent in 2007, according to the Central Bank.
Economists said this surge was one of the main causes of inflation along with high rents as foodstuff and beverage is the second largest component of the country’s consumer price index, with a relative weight of 14.4 per cent.
Central Bank figures in other GCC members also showed sharp increases in food prices, which shot up by at least seven per cent in Qatar last year, 6.8 per cent in Kuwait and 10.8 per cent in Oman.
“There are a host of factors responsible for the inflation problem in the GCC and the surge in food prices is one of the main factors,” a UAE bank manager said.
“While member states can deal with the other factors, including high public spending, excess liquidity and a surge in local rents, I do not see how they will deal with the food price problem as it is an international problem unless of course they will introduce heavy subsidies. But as you know, subsidies are only a temporary solution and they will also be a big burden on the budget. The main problem is that the GCC countries receive most of their food through imports.” GCC states are among the largest food importers in the world given their poor farm potential due to their desert nature.
The bulk of their food imports come from outside the Arab region, including the United States and other countries.
Official Arab figures showed the GCC’s combined farm imports peaked at around $46.29 billion (Dh169.8bn) during 2005-2007.
They accounted for around 45 per cent of the total Arab food import value of $102bn although the population of the six members of around 35 million does not exceed 11 per cent of the total Arab population. A breakdown showed Saudi Arabia was the largest Arab food importer, with a value of $26bn during 2005-2007. Imports by the UAE totalled $9.3bn, while they stood at $4.5bn in Oman, $4.3bn in Kuwait, $1.4bn in Bahrain and around $790 million in Qatar.
http://www.business24-7.ae/cs/article_show_mainh1_story.aspx?HeadlineID=4210
By Nadim Kawach on Friday, March 21 , 2008
A surge in global food prices has put pressure on the fiscal balance of Gulf oil producers and complicated their efforts to stem inflation given their heavy reliance on farm imports, according to official data.
Without heavy government subsidies, higher food prices will remain a key factor in soaring inflation rates in the Gulf Co-operation Council (GCC) along with a surge in rents, high public spending and excessive domestic liquidity.
Official figures showed food prices have jumped by four to 10 per cent in the GCC over the past three years mainly as a result of soaring farm costs in many countries that are considered a key source for GCC food supplies.
“Over the past year, prices of some food products have risen substantially. For many economies, food represents a significant share of export receipts or import payments. Thus, higher food prices can have a significant impact on a country’s net trade balances,” the International Monetary Fund said.
It said some food-exporting countries in the Western Hemisphere – such as Argentina, Bolivia, and Chile – and in southern Africa – such as South Africa, Namibia, and Swaziland – have benefited from higher food prices since 2002.
However, many of the poorer regions of Africa and a number of countries in Asia as well as in the Middle East are net losers, the IMF said in a study.
Higher global food prices put upward pressure on the cost of living, both directly and through their potential impact on non-food prices. Average domestic food price inflation [defined as the purchasing-power-parity weighted aggregate of an individual country’s domestic food price inflation] rose to about 4.5 per cent in the first four months of 2007 from about three per cent over the same period in 2006. The figure is more than nine per cent for developing countries.
Experts said the surge in food prices constituted a major obstacle for the GCC’s efforts to tackle inflation as farm imports account for a large part of the group’s total imports. The foodstuff’s relative weight in the consumer price index (CPI) in some members is as high as 25 per cent, which means any increase in food prices will have a heavy impact on total inflation.
In Saudi Arabia, by far the largest and most populous GCC member, food prices surged by 5.6 per cent in 2006 and 7.1 per cent in 2007.
The increase, along with a steady rise in rents and prices of other items, increased the Kingdom’s inflation rate to its highest annual average of 4.1 per cent in 2007.
The continuous increase in food prices in Saudi Arabia, the world’s top oil exporter, has given rise to smuggling of some foodstuffs and manipulation by traders to influence prices and net higher profits.
On Wednesday, the official media reported that Saudi Arabia’s new Trade Minister Abdullah Zainal formed a committee to study the price increase after meeting representatives of food traders.
He said the committee would consider measures to halt smuggling and manipulation and curb price increases. In the UAE, the largest importer in the Middle East, food prices soared by 5.5 per cent in 2006 and eight per cent in 2007, according to the Central Bank.
Economists said this surge was one of the main causes of inflation along with high rents as foodstuff and beverage is the second largest component of the country’s consumer price index, with a relative weight of 14.4 per cent.
Central Bank figures in other GCC members also showed sharp increases in food prices, which shot up by at least seven per cent in Qatar last year, 6.8 per cent in Kuwait and 10.8 per cent in Oman.
“There are a host of factors responsible for the inflation problem in the GCC and the surge in food prices is one of the main factors,” a UAE bank manager said.
“While member states can deal with the other factors, including high public spending, excess liquidity and a surge in local rents, I do not see how they will deal with the food price problem as it is an international problem unless of course they will introduce heavy subsidies. But as you know, subsidies are only a temporary solution and they will also be a big burden on the budget. The main problem is that the GCC countries receive most of their food through imports.” GCC states are among the largest food importers in the world given their poor farm potential due to their desert nature.
The bulk of their food imports come from outside the Arab region, including the United States and other countries.
Official Arab figures showed the GCC’s combined farm imports peaked at around $46.29 billion (Dh169.8bn) during 2005-2007.
They accounted for around 45 per cent of the total Arab food import value of $102bn although the population of the six members of around 35 million does not exceed 11 per cent of the total Arab population. A breakdown showed Saudi Arabia was the largest Arab food importer, with a value of $26bn during 2005-2007. Imports by the UAE totalled $9.3bn, while they stood at $4.5bn in Oman, $4.3bn in Kuwait, $1.4bn in Bahrain and around $790 million in Qatar.
http://www.business24-7.ae/cs/article_show_mainh1_story.aspx?HeadlineID=4210
Tuesday, March 18, 2008
Unified GCC Currency May Come by 2010
Unified GCC Currency May Come by 2010
13/Mar/2008
Arab News
Assistant Secretary-General for Economic Affairs at the Arab League Dr. Mohammed Ibrahim Al-Tuwaijri has dismissed the idea that any GCC state, except Kuwait, would cut its currency link with the US dollar. He said there were reports the dollar might recover by March 2009. Talking on the sidelines of the regional meet on GCC policies for using clean fuel for cleaner environment Al-Tuwaijri said it was not in the interest of GCC states to cut their currency link with the dollar since this might lead to chaos, especially since all deals and transactions were in carried out in dollars.
Regarding the unified GCC currency, he said all the recent indications showed it would be issued by 2010 in view of the international economic situation such as inflation and recession in the US dollar that reflected negatively on GCC currencies linked to it. He added the introduction of a unified GCC currency would be one of positive resolutions to better the economic situation. Minister of Oil and Gas and Head of the National Oil and Gas Authority Dr. Abdulhussain ibn Ali Mirza, who opened the regional meet on developing GCC policies to use cleaner fuel for better environment, said: “Bahrain has become the first country in the region to produce low Suplphur Diesel and also jet fuel with less CO2 omissions.”
The two-day meeting will discuss issues related to fuel and cars and what has been achieved by the GCC, Middle East and North African countries to improve the quality of fuel through setting standards for vehicles in view of the challenges facing the production of unleaded fuel. The minister said that international efforts and cooperation was essential to improve the international power scenario including the oil sector to maintain environment through improving petroleum products.
Mirza mentioned a number of projects in the field, including unleaded fuel, which has been produced since 2000 at a cost of $7.4 million. Prime Minister Shaikh Khalifa ibn Salman Al- Khalifa in December opened a complex to produce unleaded diesel at a cost of $725 million with investment revenue reaching 30 percent.
“There are a number of similar projects of international standards to maintain environment which would be launched after completing their technical and financial studies.” The Director and Regional Representative of the UN Environment Program for West Asia Dr. Habeeb Al-Hobar said an international partnership was essential to tackle the issue.
He hailed the role of international partnership in using natural resources wisely and also the use of cleaner fuel under the sponsorship of the un environment program which, he said, contributed in spreading the use of unleaded fuel. He also praised the policies and programs of Arab countries to achieve a cleaner environment, underlining the ability of the GCC states to use unleaded fuel since 2003 in Saudi Arabia, Kuwait and the UAE.
Deputy Chairman of the general committee to protect fishery resources, environment and wildlife Dr. Ismael Al-Madani referred to the increasing number of cars in Bahrain with about nine percent considered as dangerous from the point of view of traffic and leading to accidents and deaths.
13/Mar/2008
Arab News
Assistant Secretary-General for Economic Affairs at the Arab League Dr. Mohammed Ibrahim Al-Tuwaijri has dismissed the idea that any GCC state, except Kuwait, would cut its currency link with the US dollar. He said there were reports the dollar might recover by March 2009. Talking on the sidelines of the regional meet on GCC policies for using clean fuel for cleaner environment Al-Tuwaijri said it was not in the interest of GCC states to cut their currency link with the dollar since this might lead to chaos, especially since all deals and transactions were in carried out in dollars.
Regarding the unified GCC currency, he said all the recent indications showed it would be issued by 2010 in view of the international economic situation such as inflation and recession in the US dollar that reflected negatively on GCC currencies linked to it. He added the introduction of a unified GCC currency would be one of positive resolutions to better the economic situation. Minister of Oil and Gas and Head of the National Oil and Gas Authority Dr. Abdulhussain ibn Ali Mirza, who opened the regional meet on developing GCC policies to use cleaner fuel for better environment, said: “Bahrain has become the first country in the region to produce low Suplphur Diesel and also jet fuel with less CO2 omissions.”
The two-day meeting will discuss issues related to fuel and cars and what has been achieved by the GCC, Middle East and North African countries to improve the quality of fuel through setting standards for vehicles in view of the challenges facing the production of unleaded fuel. The minister said that international efforts and cooperation was essential to improve the international power scenario including the oil sector to maintain environment through improving petroleum products.
Mirza mentioned a number of projects in the field, including unleaded fuel, which has been produced since 2000 at a cost of $7.4 million. Prime Minister Shaikh Khalifa ibn Salman Al- Khalifa in December opened a complex to produce unleaded diesel at a cost of $725 million with investment revenue reaching 30 percent.
“There are a number of similar projects of international standards to maintain environment which would be launched after completing their technical and financial studies.” The Director and Regional Representative of the UN Environment Program for West Asia Dr. Habeeb Al-Hobar said an international partnership was essential to tackle the issue.
He hailed the role of international partnership in using natural resources wisely and also the use of cleaner fuel under the sponsorship of the un environment program which, he said, contributed in spreading the use of unleaded fuel. He also praised the policies and programs of Arab countries to achieve a cleaner environment, underlining the ability of the GCC states to use unleaded fuel since 2003 in Saudi Arabia, Kuwait and the UAE.
Deputy Chairman of the general committee to protect fishery resources, environment and wildlife Dr. Ismael Al-Madani referred to the increasing number of cars in Bahrain with about nine percent considered as dangerous from the point of view of traffic and leading to accidents and deaths.
GCC common currency dollar peg dilemma
GCC common currency dollar peg dilemma
By Nadim Kawach on Sunday, March 16 , 2008
Gulf countries are debating whether to peg the single common currency, which is likely to be launched in 2010, to the US dollar, a senior Gulf economy official said.
Abdul Aziz Al Owaishiq, Director of the GCC Economic Integration Department, told Qatar’s Arabic language daily Al Raya that a debate within the GCC is on to decide whether to peg the planned common currency to the US dollar.
The Gulf Co-operation Council (GCC) countries, which control more than 45 per cent of the world’s oil wealth, are sticking to their original 2010 deadline to set up the currency union despite Oman’s decision to suspend its participation.
Owaishiq said GCC monetary authorities have not taken any decision yet on the link between the planned common Gulf currency and the dollar, adding it would be up to the GCC heads of state to decide on this issue.
“I would like to note that the Supreme Council has empowered the GCC monetary authority to decide on whether to peg the common currency to one or more currencies or float this currency, depending on the requirements and conditions of the coming stage.”
Owaishiq said the GCC monetary union would accelerate growth in member states. “I can tell you that pegging the GCC currencies to the US dollar does not necessarily mean their exchange rate cannot be changed against the dollar while keeping that peg,” he said.
“I believe if the change in this rate by the GCC countries is by the same percentage, then this will not affect the arrangements for the monetary union because the GCC’s proportionate exchange rates will remain fixed,” he added. GCC states have decided to keep their currencies linked to the US dollar as they pursue plans to create a landmark monetary union following the launching of the common market early this year and the customs union four years ago.
Kuwait, which had its dinar pegged to a basket of currencies for more than two decades, joined the peg two years ago before it decided to revert to the basket, in which the US dollar is believed to account for 80 per cent. Speculation has mounted over the past few months that some GCC states will appreciate their currencies against the dollar while keeping the peg in a bid to curb inflation that has surged to double-digit rates in some member economies.
“The currency union timetable is still on track for 2010. It is a decision by the GCC Supreme Council (heads of state),” he said.
Commenting on revaluation, he said a possible decision by Gulf Arab states to revalue their currencies against the weakening US dollar will not block their plans to create the Middle East’s first monetary union.
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Last Update at 10:09 pm on March 16, 2008
By Nadim Kawach on Sunday, March 16 , 2008
Gulf countries are debating whether to peg the single common currency, which is likely to be launched in 2010, to the US dollar, a senior Gulf economy official said.
Abdul Aziz Al Owaishiq, Director of the GCC Economic Integration Department, told Qatar’s Arabic language daily Al Raya that a debate within the GCC is on to decide whether to peg the planned common currency to the US dollar.
The Gulf Co-operation Council (GCC) countries, which control more than 45 per cent of the world’s oil wealth, are sticking to their original 2010 deadline to set up the currency union despite Oman’s decision to suspend its participation.
Owaishiq said GCC monetary authorities have not taken any decision yet on the link between the planned common Gulf currency and the dollar, adding it would be up to the GCC heads of state to decide on this issue.
“I would like to note that the Supreme Council has empowered the GCC monetary authority to decide on whether to peg the common currency to one or more currencies or float this currency, depending on the requirements and conditions of the coming stage.”
Owaishiq said the GCC monetary union would accelerate growth in member states. “I can tell you that pegging the GCC currencies to the US dollar does not necessarily mean their exchange rate cannot be changed against the dollar while keeping that peg,” he said.
“I believe if the change in this rate by the GCC countries is by the same percentage, then this will not affect the arrangements for the monetary union because the GCC’s proportionate exchange rates will remain fixed,” he added. GCC states have decided to keep their currencies linked to the US dollar as they pursue plans to create a landmark monetary union following the launching of the common market early this year and the customs union four years ago.
Kuwait, which had its dinar pegged to a basket of currencies for more than two decades, joined the peg two years ago before it decided to revert to the basket, in which the US dollar is believed to account for 80 per cent. Speculation has mounted over the past few months that some GCC states will appreciate their currencies against the dollar while keeping the peg in a bid to curb inflation that has surged to double-digit rates in some member economies.
“The currency union timetable is still on track for 2010. It is a decision by the GCC Supreme Council (heads of state),” he said.
Commenting on revaluation, he said a possible decision by Gulf Arab states to revalue their currencies against the weakening US dollar will not block their plans to create the Middle East’s first monetary union.
More in News
Saudi Telecom plans $15bn of acquisitions
Kuwait allows dinar to fall as dollar recovers
China reports new bird flu outbreak
Airbus A380 takes off for inaugural London service
World markets jittery ahead of Fed decision
UAE markets feel the heat as global equities slump
Capital offers huge scope for growth of exhibition industry
Dubai World buys stakes in African reserves
Etisalat takes swift action over sluggish broadband
MoU to set up DMCC cotton trade corridor
Last Update at 10:09 pm on March 16, 2008
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