Saudi Arabia says deadline for GCC monetary union may be reviewed

Riyadh: Saudi Arabia's finance minister has said that the GCC states may have to review the 2010 target date for introducing a single currency after Oman said recently it would not abide by the deadline.

"All options are open, including the 2010 target," Ebrahim Al Assaf said in an interview in Riyadh.

Oman said this month it was pulling out of the January 1, 2010, deadline because of delays in GCC-wide measures such as implementing a customs union agreement.

"It is better to take slower steps that are implemented than take bigger steps that some countries cannot swallow, and will perhaps lead to failure," Assaf said.

Still, Saudi Arabia, which accounts for 60 per cent of the GCC's Gross Domestic Product (GDP), is seeking to meet the 2010 deadline, Assaf said.

The six states, which pump about a fifth of the world's crude oil, may create a monetary board rather than a central bank to manage a single currency, Assaf said, giving no further details.

"Perhaps we need to review these steps between one extreme of having a central bank and the other of taking things step-by-step," he said.

Agreement

The six states have already agreed on fiscal and economic criteria for creating the currency.

"We have to go back and discuss what are the steps needed to reach it [union], how we can do it and if there are interim arrangements that we can adopt in the meantime," Assaf said.

Gulf finance ministers and central bank governors have yet to agree how to assess economic criteria, which set a deficit cap, limit public debt to 60 per cent of GDP and inflation to the average of the six states plus two per cent.

Interest rates are to be no higher than the average of the lowest three states plus two per cent, and countries must have foreign exchange reserves to cover four to six months of imports.

Assaf said Saudi Arabia's public debt at the end of 2007 may fall to 24 per cent to 25 per cent of expected GDP this year.