Afghan bank opens normal UAE account

The Central Bank of Afghanistan has opened a bank account in the UAE, having fulfilled various stipulations of the UAE Central Bank, the governor, Sultan bin Nasser Al Suwaidi, has confirmed.

"The Central Bank of Afghanistan opened a normal account a few days ago. It can be a dollar account, dirham or any currency account," he told Gulf News.

Asked if UAE is extending any credit to Afghanistan, he said "at this point of time, none has been extended."

Earlier, in his keynote address at a business forum in the capital, the governor stressed the need for an export promotion centre, managed entirely by the private sector.

"The creation of trading companies as in Hong Kong and South Korea will help exports since these companies provide information on foreign companies' needs and specialise in export operations."

Given the size of the local market, exports are needed for a viable industry, he added. The UAE has achieved success in diversifying its economy but it needs to take measures to ease its reliance on oil as a source of revenue.

Underscoring the need to diversify the government revenue base, he suggested a two-pronged approach - one, to increase the customs tariffs to reach the common GCC level, imposing a fee for government services, etc, and two, a fiscal policy to mitigate the negative impact of decline in oil and gas revenues for the government.

"The diversification policy has succeeded to a large extent in the UAE and the main beneficiaries of this policy are manufacturing, trade, tourism and transport.

However, oil and gas represented 76 per cent of government revenues in the 2000 consolidated government financial account."

The governor called for more emphasis on the development of small and medium size manufacturing entities, the current engines of growth in developed and developing countries.

The GCC, as measured by their total GDP, represents 1.02 per cent of the world economy and their economies are still dependent on just crude oil which leaves them vulnerable to fluctuations in oil prices.

"We need to adopt appropriate policies to absorb these external shocks and thus the need to diversify the economic base."

The GDP of the GCC was $321 billion in 2000 with the oil and gas sector representing 43 per cent of this. "Diversification of the economic base still has a long way to go."

UAE's GDP totalled $66 billion in 2000 with oil and gas accounting for 34 per cent. On the latest UAE budget, he said, it reflects better expenditure control on the government's part with the deficit being reduced.

The forum was organised by the business faculty of Abu Dhabi Women's College.