Thursday, 08 April 2010
Sultanate chairs joint meetings of Arab financial authorities - Arab countries withstood global financial crisis well
KHARTOUM — The annual joint meetings of the Arab Financial Authorities, which comprises the Arab Fund for Social and Economic Development, the Arab Monetary Fund, the Arab Establishment for Investment Guarantee and the Arab Bank for Economic Development in Africa and the Arab Authority for Investment and Cultural Development concluded here yesterday.
The annual joint meetings, chaired by the Sultanate, were held in the presence of Sudan President Omar al Bashir, and representatives of the Arab financial institutions. The meeting approved cutting 10 per cent of the net profits of the Arab Fund for Social and Economic Development to support the Palestinian people, in addition to allocating $50 million to support the Palestinian people in co-operation with Al Aqsa and Al Quds Fund. Speaking at the meeting, Ahmed bin Abdulnabi Macki, National Economy Minister and Deputy Chairman of the Financial Affairs and Energy Resources Council, Chairman of the Governors Board, said: “Despite the hard global financial conditions, the Arab financial institutions managed to achieve satisfactory financial results that enabled them to ensure sustainability and contribution to the socio-economic development while relying on their own resources and preserving their capabilities.
They therefore managed to develop their financial and economic structures.” He added that the financial institutions present a good and successful example for the joint Arab action and that it’s contribution to the socio-economic development in the Arab world, and other developing countries stand as an evidence for the determination and will to lay the foundations for the co-operation among us.
Macki pointed out that in 2009, the implications of the global financial crisis moved from the financial sector to the real sector and the transfer of the negative impacts of the crisis from the developed to developing countries including Arab countries. He pointed out that the initial estimates point out that the global economic growth declined from 3 per cent in 2008 to 0.8 per cent in 2009.
While most of the developed countries recorded a negative growth, the developing countries and the Arab countries recorded positive growth. He pointed out that performance of the world economy improved during the second half of 2009 due to the measures taken by the developed countries, especially in terms of introducing some policies that boost the economy and curb the negative impact on investment and production.
He added that due to these policies and programmes the world economy is expected to grow by 3.9 per cent this year and that restoring the growth to the positive trend in a relatively reasonable period is a positive thing. Macki added that the impact of global financial crisis on the Arab countries has been relatively limited as the average economic growth rate declined from 6 per cent in 2008 to 3.3 per cent in 2009, while it was negative in a number of other countries and regions.
The impact of the financial crisis on the Arab countries varied from country to country depending on the conditions at the beginning of the crisis, the extent of its openness to outside world and the measures taken to combat the crisis. Macki also pointed out that the Gulf countries were in a good financial position due to high oil prices during the period before the crisis.
They have been affected by the decline in the value of their oil exports due to decline in oil prices compared to the record levels it reached by mid 2008 and the reduction in oil production in 2009. The average economic growth rates for these countries declined from 7.8 per cent in 2008 to 0.7 per cent in 2009. Some of the financial institutions were also affected by the decline in the value of their assets abroad. This in turn affected the available liquidity and consequently the growth in the local credit and the number of financed projects. This also had a negative impact on stock and real estate markets’ performance.
***This situation called for the governments in the Gulf region to quickly intervene in the market by taking a number of measures and steps to support the banks and capital markets. The intervention included programmes for the financial stability, procedures to ensure the deposits, pumping capitals and increasing government investments. He pointed out that the total value of the Arab exports declined from $1,200 billion in 2008 to $900 billion in 2009 and that the current surplus balance for the same period declined from $336 billion to about $43 billion. The Arab government budgets were reversed from about +7.1 per cent average surplus to -0.5 per cent.
The minister added that while the Arab countries have been relatively affected by the crisis, still they are not immune from what is happening around the world. Therefore they should be ready to face external shocks and crisis. The budgets and debts of these governments should remain at acceptable levels to provide greater space for using encouraging policies to alleviate the impact of the crisis when necessary without aggravating the deficits.
In this context, there is a need of proper mechanism for swift intervention and automatic stabilisation of the economy or what is known as the reversal policies to the direction of the economic cycle. This will help in supporting the major sector and the impoverished social categories. Speaking on the occasion, Bashir hailed the role played by the Arab financial institutions and authorities in supporting the economic and investment development in Sudan. He added that such support helped Sudan a great deal to achieve good growth rates.
He pointed out that Sudan encourages Arab investments, especially as it has natural resources which can contribute to achieving food security for the Arab world. The annual meeting of the Arab financial authorities discussed a number of topics related to the financial situation for the financial institutions; assess the outcome of their operations in 2009, as well as, studying and approving the financing and investment operations in 2010.
The meetings approved a number of topics related to the financial situation; assess the outcome of operations of financial institutions in 2009, as well as studying and approving the financing and investment operations in 2010.
The meeting also appointed auditors. On the sidelines of the meetings, Arab finance ministers held the first session meeting and reviewed a number of Arab experiences in addressing global financial crisis.
They also discussed efforts towards co-operation with IMF and World Bank. They also discussed the financial and investment flows to the Arab countries. — ONA
