Business | Markets
UAE plans strategic food reserves
The UAE government is working on a national strategy to build sustained food reserves to cope with rising global food prices, a top official said.
- By Ahmed A. Elewa, Senior Reporter
- Published: 00:31 April 24, 2008
- Indian farmers winnow wheat in Amritsar.
- Image Credit: EPA
Abu Dhabi: The UAE government is working on a national strategy to build sustained food reserves to cope with rising global food prices, a top official said on Wednesday.
With the escalation of international food prices, the Ministry of Economy has agreed with major retailers in the country to maintain the prices of 2007 for basic commodities.
"We are only asking retailers to diminish their profit margins in this respect, but not to incur losses, and as a government we do not have subsidies on our agenda," Sultan Bin Saeed Al Mansouri, Minister of Economy, said yesterday.
Addressing a forum organised by the Swiss ambassador to the UAE under the slogan Challenges 2009, the minister and Central Bank Governor Sultan Bin Nasser Al Suwaidi outlined the critical challenges facing the UAE and the region in 2009.
"Inflation is one of the most crucial challenges facing us in 2009, especially for the Middle East countries, where the world's most active economies are," the minister said.
"In the UAE we seek to curb inflation through the application of local policies such as consumer protection and our agreement with retailers," he told the audience, announcing that the country's ambitious target is to take inflation down to five per cent.
"I cannot reveal any assessment for inflation at this point as we are working out the issue at the cabinet at present, and we will announce accordingly," Al Mansouri admitted.
Other challenges he outlined include the volatile international financial market, achieving the GCC monetary union, rising commodities prices especially energy, exchange rates, and global warming.
"In this region, with limited natural resources, we need to wisely invest what we have to diversify our economies away from oil," he added, emphasising on the international food crisis which has affected 36 countries and more than 73 million people so far.
The Central Bank governor emphasised inflation as the most crucial challenge for the UAE in 2009.
"Inflation in the UAE started with local sources; mainly rents, affecting other related commodities such as building materials, as well as all commodities that include rent in the cost, and these are many," Al Suwaidi said.
However, the governor was optimistic on neutralising the effect of rents on the inflation rate, with mega real estate development projects soon to be introduced to the market.
Another challenge cited by Al Suwaidi was the repercussions of the US subprime mortgage crisis.
"Since the second half of 2007, a problem that affected a limited segment of the US economy has escalated and spread, and is still, across other segments and to other countries of the world taking us to the biggest financial crisis since World War Two," the governor said.
"Nevertheless, the resil-ience of the emerging and developing economies has limited the impact of the adverse shocks to some extent, reflecting the success of the development policies applied in two decades, but this cannot go on for long," Al Suwaidi warned.
He warned against excessive tightening of monetary policies as it will negatively affect economic growth. "Calls for increasing interest rates will result in curbing economic growth rates and this is a risky measure," he said, suggesting a mixed package of measures to applied according to the specific circumstances of every country.
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