Impact of Crisis on Arab World Limited

(MENAFN - Jordan Times) The impact of the global economic crisis on the Arab world is limited relative to other countries and the region will recover soon from the global financial meltdown, the Arab Monetary Fund (AMF) chief said Wednesday.

"Financial indicators show the impact of the crisis on the Arab world has been limited� the worst is over and we [the Arab states] are recovering," AMF Director General and Chairman of the Board Jassim Mannai told reporters on the sidelines of the annual summit of Arab financial institutions held at the shores of the Dead Sea.

Mannai gave no figures regarding the damage the global meltdown caused to Arab economies.

However, he said: "The situation differs from one country to another... It is impossible to generalise and say that Arab states suffer from deficits� Some of the Arab states still enjoy good financial surpluses."

Yesterday's gathering brought together finance ministers, central bank governors and other financial officials from various Arab countries.

At the meeting, Jordan urged Arab states to intensify cooperation to increase inter-Arab trade and investment, noting that the Arab world's extensive supply of skilled labour makes it highly capable of dealing with the present and upcoming challenges caused by the crisis.

Acting Prime Minister and Minister of Interior Nayef Qadi called for a comprehensive revision of strategies and plans for the Arab world to deal with the crisis, emphasising that Arab financial institutions can open new horizons of cooperation by financing major development projects in Arab states and finding financing tools for Arab investors that should be "highly secure but promising strong returns".

Also yesterday, Jordan and the UAE signed an agreement which will help increase Emirati investments in the Kingdom and another $55 million loan agreement with the AMF to support reforms in the Kingdom's financial sector.

In his remarks to the press, Mannai, who played down the expected impact of the economic downturn on the Arab states, said: "The impact of the crisis is less on Arab states than other countries� What is happening at this stage is that Arab states are adapting to the new situation and they will overcome the crisis quickly."

The AMF chief attributed the "limited" impact of the crisis to prudent financial and monetary policies and banking monitoring exercised by central banks in Arab states. He also said Arab states rushed to increase public expenditure in light of the crisis, which will ensure the continuation of positive economic growth rates in the Arab world.

"Such policies helped in protecting banks from falling into the problems other banks in the world faced� To date, no [Arab] bank has gone bankrupt like other banks in the US and other countries," Mannai added.

Abdul Latif Hamad, chairman and director general of the Kuwait-based Arab Fund for Economic and Social Development, urged extensive cooperation between Arab states to deal with the crisis, which he said has led to shrinking oil earnings and a reduced flow of investments.

According to Hamad, the volume of investment portfolios of Arab sovereign funds and financial reserves dropped by 30-50 per cent in the wake of the crisis.

At the meeting, that concluded yesterday, officials looked into proposals to deal with the crisis and other issues related to Arab financial institutions