Gulf may launch single currency in 2015

6 Jan 2010, 1810 hrs IST, REUTERS

RIYADH: A single Gulf Arab currency could be launched in 2015 if countries from the Gulf Cooperation Council (GCC) speed up the process, a senior official from the bloc's secretariat said on Wednesday.
Rulers from the world's top oil exporting region endorsed the much-delayed monetary union last month despite the pullout of the United Arab Emirates -the bloc's second-largest economy- and Oman. Policymakers from the other four states -Saudi Arabia, Kuwait, Qatar and Bahrain- are currently expected to set a timetable for the creation of a joint central bank, but launching the single currency is still a distant prospect.

"I personally expect the single currency to be launched in 2015, if we step up the efforts and the work of various committees," Mohamed al-Mazrooei, GCC Assistant Secretary General for Economic Affairs told. Mazrooei's comment is the first from the GCC secretariat that sets a potential new timetable for the single currency's launch after the bloc abandoned an initial 2010 deadline.

"I think it's an optimistic scenario given the slower-than-expected progress that has been achieved up to now," said John Sfakianakis, Calyon's chief economist for the Middle East. "But it's feasible if the political will is there." Striking a power balance in the union remains a challenge as some smaller Gulf states resist the dominance of Saudi Arabia, the world's biggest oil exporter.

"They need to be steadfast to push it forward. They have to complete various technical tasks such as establishing technical committees, synchronizing statistics, facilitating capital and labour movements, deciding on the peg and then the name of the currency," Sfakianakis added. A few days before it hosted a rulers' summit in December, Kuwait said that it may take up to 10 years to adopt the single currency. The UAE opted out of the monetary union in May in protest over a decision to base the Gulf central bank in Saudi Arabia, dealing a serious blow to the project. Oman withdrew in 2006. The GCC bloc -a loose economic entity that seeks to emulate the European Union's economic and monetary integration -abandoned last year an initial deadline for issuing common notes and coins in 2010, saying a joint monetary council would determine a new timetable for its issuance. Oman said earlier this month that it has no plans to review its decision to withdraw now or in the future.