Gulf central bank chiefs on Wednesday wrapped up a one-day meeting on financial stability in the face of the global economic downturn and progress on regional monetary union. Monetary officials of the six-nation Gulf Cooperation Council (GCC) states also reviewed plans to establish monetary union and launch a single currency. “The GCC monetary council will meet at the end of the month to approve plans and the time-frame to complete the necessary financial infrastructure,” Kuwait Central Bank Governor Sheikh Salem Abdulaziz Al-Sabah told a news conference. “There are certain legislative and financial measures that have not been completed” for the monetary union, Sheikh Salem said. In December, the GCC summit in Kuwait approved a monetary union pact which calls for the establishment of the monetary council. The council, to be based in Riyadh, will develop in the future into the GCC central bank to be hosted in the Saudi capital. The bank will be charged with issuing the GCC single currency. Bahrain, Kuwait, Qatar and Saudi Arabia have ratified the monetary union pact while the other two members - Oman and the United Arab Emirates - have opted out. The UAE, the Gulf's second largest economy, withdrew over the choice of Riyadh as the base for the future central bank. Oman pulled out saying it could not meet the union's prerequisites. Sheikh Salem and UAE central bank governor Sultan Al-Suweidi denied that mediation is under way to bring the UAE back into the monetary union fold. He said that it was premature to say whether the single currency will be pegged to the dollar or to a basket of currencies, adding that this will be decided later. Sheikh Salem said he does not think that the global financial crisis has slowed the GCC monetary union process. Earlier, he called for more coordination between GCC states to achieve financial stability. “This period necessarily requires that our attention is focused on issues related to achieving financial stability,” Sheikh Salem said in his opening speech. “Inflationary pressures have greatly declined, but this does not mean they have disappeared... this has enabled Gulf central banks to adopt measures to face the impacts of the global financial crisis” and of slow growth, he said. Sheikh Salem also called on supervisory and monitoring agencies in GCC states to adopt “early-warning systems to boost their ability” to deal with future financial crises. Meanwhile, Kuwait's economy contracted by up to two percent last year but is expected to grow by four to five percent in 2010, the central bank governor said on Wednesday. “So far, I don't have final official figures for 2009, but we expect a decline in GDP (gross domestic product) of between 1.5 percent and 2.0 percent,” Sheikh Salem said. “As for 2010, we expect the GDP will expand by four to five percent,” he added. Like other Gulf states, Kuwait was severely affected by the global economic downturn as a result of a slide in oil revenues, which contribute about 94 percent of total public income. Riding on soaring oil prices prior to the global crisis, Kuwait's GDP grew 6.3 percent in 2006, 4.5 percent in 2007 and 5.6 percent in 2008.
