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Sun 24 Feb 2008 12:06 PM

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IIF chief sees challenges for Gulf economies

Head of financial institution association warns GCC needs to improve education and corporate governance.

The chairman of the Institute of International Finance (IIF), a global association of financial institutions, has warned that the GCC needs to address shortfalls in skills and corporate governance.

Speaking at the IIF Eleventh Annual Meeting of Middle Eastern and North African Bank Chief Executives, held at Dubai International Financial Centre (DIFC) on Saturday, Dr Joseph Ackermann said that the implementation of the GCC Common Market would attract greater foreign investment, but that the region still needed to address some "structural issues".

Ackermann said: "For example, the education systems require further upgrading and re-orientation to the needs of the market if unemployment among nationals, particularly graduates, is to be reduced. Corporate governance standards are also not as robust as they should be."

However, he praised the DIFC's efforts to promote good corporate governance in the region, and said that the IIF was working with the centre to develop this further.

He also said that monetary policy in some GCC countries was struggling to keep inflation in check, and that the dollar peg used by the currencies of five of the six Gulf states would continue to pose challenges as the US eases monetary policy this year.

Ackermann said: "Monetary policy in most GCC countries has to balance the objectives of maintaining the dollar peg, which has contributed to macroeconomic stability, with those of safeguarding monetary stability."

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