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Fri 11 Dec 2009 03:39 PM

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Kuwait to seek UAE, Oman return to monetary union

Kuwait will work towards bringing back the two countries - finance minister.

Kuwait will seek the return of the UAE and Oman to the Gulf Arab unified currency plan, the official KUNA news agency reported on Friday citing the country's finance minister.

"This would strengthen the economies of the region and turn it into an economic bloc of [importance] that would be taken into consideration globally," said Mustapha al-Shamali.

In May, the UAE broke ranks with four other Gulf Arab states by withdrawing from the single currency plan in protest at a decision to base the joint central bank in Saudi Arabia, the largest Arab economy.

Oman opted out of the monetary union in 2006 and the GCC has since acknowledged it would miss the 2010 single currency deadline.

Kuwait will work towards bringing back the two countries through its presidency of the Gulf Cooperation Council and its summit set for December 14-16, Shamali said without giving details.

In 2001, the six members of the GCC had agreed to set up a monetary union in the world's top oil exporting region like that of the European Union.

The GCC is a loose economic and political alliance that also includes Bahrain and Qatar. Members rotate the presidency of the group annually.

The UAE, the second largest Arab economy, said in May that it would consider rejoining the monetary union if the terms change and its neighbours agree to allow a joint central bank to be based in the country.

Five of the six nations peg their currencies to the US dollar but a range of technical issues such as harmonisation of banking regulations remain to be tackled in order for them to share a new currency, which is seen raising the bloc's economic weight as well as reducing costs for businesses.(Reuters)

Philbert Suresh, Academic Professional 9 years ago

It is time for those who fell aprt fromthe GCC Currency Union - to get back and weather the storms in the monetary policies for the greater good of the economy inthe region. Establishing a union that complies with the strong fiscal discipline will enable to control the erraric movements in the economy. Take a page from other trading blocs such as EU etc