UAE Minister of State for Finance Obaid Humaid Al Tayer emphasized the importance of coordinating viewpoints of Arab states to achieve sustainable development and growth and stability of the Arab economy at the conclusion of the annual joint meetings of Arab Financial Institutions in Khartoum. He said “to achieve economic growth and stability of the Arab countries, we need to apply best practices in financial policies and improve the investment environment. We need to coordinate positions on international economic and financial developments, maximize the benefit from the experiences of regional and international economic blocs and participate in the G20 decision-making process. In this regard, we commend the role played by the Kingdom of Saudi Arabia in G20. We propose a mechanism of coordination between the Arab Finance Ministers Council and Saudi Arabia regarding topics presented in the group.” He further said “to meet the challenges facing Arab countries, it is urgent to strengthen and develop Arabic financial systems so that they can support structural changes to respond to the growing demands of the private sector and to compete in a rapidly evolving global economy. We need to develop programs and standards to reduce the incidence of financial vulnerability of the Arab financial system to internal and external financial shocks,” Al Tayer added. “In light of growing foreign competition in the region, there is urgent need to consolidate small financial institutions in the Arab world to strengthen the financial system. Consolidation among national banks will help them work on the international and regional levels which many of these banks currently cannot do due to their small volumes and ability,” he noted. Al Tayer said the UAE experience has proven the benefits of consolidation of small banking units to compete locally and regionally and to develop their products. He added strengthening the financial system also needs reform of the macro-economy framework to increase growth rates. “This can be done through higher rates of savings and investment, in addition to developing Arab financial markets and introducing legislative system to support the Islamic banking industry,” Al Tayer noted. The meetings were attended by Arab ministers of finance and economy and governors of central banks, in addition to representatives of regional and international development institutions. Key decisions were taken during the meetings such as: approving the 2010 investment plan of each institution; applying resolutions of the shareholders Council to establish and support private sector projects financially, authorizing the Arab Fund for these and a development of a regulatory list to manage the account. Projects of public policies and guidelines have also been developed with contributions made by member states of $1.1 billion. Moreover, 10 percent of the net income of these institutions in 2009 has been allocated to Palestine through Al Aqsa and Al Quds funds. The allocations reached $78.8m. The annual meetings focused on international and regional economic developments, especially those related to global financial crisis. They reflected intent to cooperate and partner in joint Arab economic action and activating the role of Arab Financial Institutions. There was an urgent need to discuss a strategy supporting joint Arab economic development and activating its mechanisms to deal with the situation caused by global economic crisis and share experiences of other countries, international and regional organizations. The Arab Financial Institutions were established in the early 1970s to support economic and social development, promote joint Arab action, ensure food security and support economic, financial and technical cooperation between African countries and the Arab world. These five institutions include the Arab Monetary Fund, Arab Fund for Economic and Social Development, Arab Bank for Economic Development in Africa, Arab Authority for Agricultural Investment and Development and The Arab Institution for Investment Guarantee Corporation and Export Credit Total capital of these institutions reached $13.1 billion at the end of 2009. During 2009, the financial performance of these institutions improved and net profit was at $788.1 million versus a net loss of $120.5 million in 2008 due to losses in investment portfolios in wake of the global financial crisis. The performance of investment portfolios during 2009 improved reaching a net income of $385.5 million versus a net loss of $490 million last year.
