Dubai: Kuwait on Sunday moved to prop up one of its banks and Saudi Arabia extended $2.7 billion (Dh10 billion) in credit to needy citizens a day after Gulf finance ministers said the liquidity situation is stable - as the global financial crisis began to bite into the region's economies, sending stocks into a tailspin.
The move comes weeks after the UAE extended government guarantees to bank deposits and called for a coordinated GCC response.
The Kuwait Central Bank was forced to step in to support Gulf Bank, which was hit by losses from trading in currency derivatives after the dollar rose, prompting the government to announce it would guarantee local bank deposits.
Saudi Arabia unveiled plans to deposit 10 billion riyals into the Saudi Credit Bank, which was established to extend interest-free loans to low-income citizens to help them overcome financial difficulties.
The actions spooked investors. Saudi Arabia's Finance Minister Dr Ebrahim Al Assaf said the econ-omies of the GCC states are showing strong indications of relatively higher growth rates and lower inflationary levels.
"The GCC economies will continue to maintain a good growth rate ranging between 4 per cent and 6 per cent in 2008 despite the global economic slowdown. If the rate slows down a little, it is because of the slowdown in growth in the oil sector. But the non-oil sectors are expected to continue growing," he said. Al Assaf made the remarks in a press statement issued at the end of an emergency meeting of GCC finance ministers and central bank governors in Riyadh on Saturday.
However, Gulf markets tumbled to multi-month lows yesterday. Qatar and Oman indices fell more than 8 per cent, while Dubai sank 4.74 per cent and Saudi Arabia's index slipped 3.77 per cent.
-With inputs from Reuters and Mariam Al Hakeem, Correspondent
