A monetary union deal among the Gulf states requires ratification by three members of the group, a senior official said Tuesday. “We hope this will happen by the end of the year,” said Mohamad Al -Mazroui, assistant secretary general for economic affairs in the Gulf Cooperation Council at a central bankers meeting in Abu Dhabi. Al-Mazroui said that only one state out of the four Gulf nations that remain committed to the project has so far ratified the Gulf Monetary Union agreement. He declined to name the country. Oman and the United Arab Emirates have withdrawn from the plan, which sees one central bank for the region and greater trade and finance cooperation. Only Kuwait, Saudi Arabia, Bahrain and Qatar are still committed to the project, which will eventually create the region's first unified currency. The UAE, which dropped out of the union in spring, reconfirmed Monday that it has no plans to rejoin the project. The central bank governors also called for greater governance of banks struggling with hefty exposure to troubled businesses. “The next phase will require closer cooperation between central banks and monetary institutions,” United Arab Emirates central-bank chief, Sultan bin Nasser Al Suwaidi, said in his opening speech. Calls for greater coordination and regulation among Middle Eastern countries formed the main theme for Monday's meeting, echoing similar calls from the meeting of the Group of 20 leading economies last week. The region's central bankers see coordination as key to monitoring financial firms, reeling from billions of dollars worth of exposure to Middle Eastern family businesses and real estate. “The global economic crisis proved a need to have a better monitoring and supervision of financial institutions in the Arab world,” Central Bank of Sudan Gov. Sabir Mohamed Hassan said in a speech at the meeting. Financial firms throughout the Middle East are struggling with exposure to two of the region's largest conglomerates, Ahmad Hamad Al Gosaibi Bros. & Co. and the Saad Group. The companies defaulted on some loan obligations earlier this year, and lawsuits against the two firms are stacking up as regional lenders try to retrieve their cash. A list shows exposure of at least $7.4 billion to global firms via syndicated loans, but total exposure including local banks is much higher. Al Suwaidi said 13 of his country's banks have exposure to the two Saudi groups, and he promised to reveal a list of firms with their total liabilities. He said banks' earnings will be lower this year as they make provisions. Central Bank of Oman Executive President Hamood Al Zadjali said three of his country's banks have exposure. No other governors spoke specifically about their financial sector's exposure to the groups. Al Zadjali said Oman would benefit from its foreign-reserve holdings of UK sterling and euros. He expects Oman's growth to be between 1 percent and 2 percent this year, depending on oil prices. Central Bank of Bahrain Governor Rasheed Al Maraj said the country will see its gross domestic product grow 3 percent this year. Saudi Arabian Monetary Agency Gov. Mohammed Al-Jasser said the country isn't selling its foreign reserves. Gulf economies aren't expected to repeat this year the high levels of growth they experienced in previous years, as oil prices have fallen from all-time highs in 2008.
