Monetary union deal enacted, says Kuwait

Monetary union deal enacted, says Kuwait

Monetary union deal enacted, says Kuwait

Wednesday, December 16, 2009

Gulf countries enacted a monetary union agreement yesterday despite the absence of major player the UAE and fellow oil producer Oman.

The central bankers from four GCC states in the union – Saudi Arabia, Kuwait, Qatar and Bahrain – will now set a timetable for the creation of a joint central bank, Kuwait's finance minister told state news agency Kuna without giving details.

Mustapha Al Shamali expressed hope the UAE and Oman would rejoin the planned union in the near future, but did not give more details about his country's drive to secure their return during its 2010 presidency of the Gulf Cooperation Council.

The UAE, the second-largest Arab economy after Saudi Arabia, pulled out of the long-planned project in May, casting doubt on its viability.

Oman, a non-Opec oil producer, abandoned the project in 2006, saying it could not meet the original 2010 deadline.

"The loss of the UAE to the monetary union was undoubtedly a considerable blow given it is the second-largest GCC market and a reasonably diversified one, so it is understandable that Kuwait should wish to see the UAE return to the project," said Emilie Rutledge, a professor at the UAE University.

Central bank governors of the four countries will have equal voting rights in the monetary council, a forerunner for the joint regional central bank, an official from the GCC secretariat told reporters on the sidelines of the summit.

Analysts are closely watching nominations to the new monetary authority for signs of concessions by Saudi Arabia, the world's largest oil exporter, which might pave the way for a return of the UAE at a later stage.