GCC single currency to be delayed

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The GCC looks set to push back the 2010 deadline for bringing in a Gulf-wide monetary union and single currency, the Saudi finance minister hinted at in comments published on Sunday.

Speaking on the sidelines of International Monetary Fund (IMF)-World Bank talks in Washington, Ebrahim Al Assaf said the issue will be discussed later this month when finance ministers and central bank governors meet in Riyadh.

“We will discuss issues including the possibility of pushing the timetable further down the road,” Al Assaf said, quoted UAE daily Gulf News.

Al Assaf did not elaborate on how far back the deadline might be moved.

However, UAE Central Bank Governor Sultan Nasser Al-Suweidi said in an interview published in the October issue of .Commerce magazine that the Gulf states were likely to miss the 2010 deadline for the single currency by more than five years.

The 2010 target date has been in doubt since Oman opted last year not to join by 2010, saying the timetable was unrealistic and that it did not want to curtail spending to meet the budget deficit target.

The plans suffered a further blow in May when Kuwait depegged its currency from the dollar, citing delays to the monetary union and inflationary pressured caused by the tumbling US currency.

The six Gulf Arab states that make up the GCC - the UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman - had agreed to peg their currencies to the dollar as a precursor to bringing in a single currency.

The delay to the single currency and weak dollar have sparked speculation that other GCC states will also ditch their pegs.

Qatar Finance Minister Youssef Hussein Kamal on Sunday was quoted as saying Qatar is satisfied with the value of its riyal currency and sees no need to change its peg to the dollar.

"Why should I change the peg when 100% of my exports and products are in the US dollar?" Kamal said in Washington, quoted Qatari daily Gulf Times.

"My products look cheaper compared with the non-dollar-pegged products. Otherwise, I cannot sell them.”

The UAE, Saudi Arabia, Oman and Bahrain have all stated several times they have no plans to depeg from the dollar.

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