Oman sees deadline for GCC monetary union as unworkable

Dubai: Oman has decided not to join a single Gulf Arab currency by 2010 because it believes monetary union by that date is unworkable, the deputy minister of national economy said yesterday.

Prerequisites to a common currency such as a customs union and a common market have still not been completed, making the 2010 deadline unfeasible, Abdul Malek Bin Abdullah Al Hinai said.

"No doubt there are benefits for Oman from the monetary union," he said by telephone from Muscat. "But the question is whether it is realistic or not."

This week's announcement that Oman would not join a monetary union of the six member nations of the Gulf Cooperation Council (GCC) by 2010 threw the project into crisis, casting doubt on whether any country in the world's top oil exporting region would meet the deadline.

The other five states could extend the deadline if they face more obstacles, Saudi Arabian Finance Minister Ebrahim Al Assaf has said. Assaf has called the 2010 target "very ambitious".

Criteria for union, including capping budget deficits at three per cent of gross domestic product, could constrain Oman as it seeks to diversify its economy away from dwindling oil revenue.

"Our country is vast and we started development later than some of the other countries," Hinai said. "We need to spend more on infrastructure."

Oman's central bank governor raised the first public questions about the 2010 deadline last month when he said Muscat was dissatisfied with progress made so far.