Spurred by high oil prices Gulf aid to fellow Arabs hits $8.64bn

Gulf Arab oil producers have stepped up their financial aid to fellow Arabs and other developing nations over the past few years following a surge in their petrodollar income, according to official statistics.

Loans and grants provided by the UAE and four other Gulf countries totalled around $8.64 billion (Dh31.7bn) during 2002-2006, compared to nearly $6.8bn during the previous five-year aid programmes between 1995 and 1999.

The total assistance stood at around $6.5bn in 2000 and 2001, bringing the total financial aid extended by the Gulf nations to $122.08bn during 1970-2006, showed annual figures by the Abu Dhabi-based Arab Monetary Fund (AMF). 

Between 2002 and 2006, the UAE extended around $921m, while financial aid provided by Kuwait was estimated at $2.09bn, by Qatar at $734m and by Oman at around $195m.

Saudi Arabia, the world’s oil powerhouse, remained by far the biggest aid donor, extending nearly $10.66bn during 2002-2006.

The AMF gave no data for 2007 but Gulf assistance was expected to have picked up because of swelling financial surpluses due to a sustained increase in the region’s income because of high oil prices and production.

The assistance plunged to its lowest five-year level during 1995-1999 after oil prices dived to one of their lowest levels and Gulf nations reeled under heavy fiscal deficits and the repercussions of the 1990 Iraqi invasion of Kuwait.It climbed to a record of around $32.7bn during the first oil boom of 1980-1984 and was as high as $31.8bn in the previous five-year period. During 1970-1974, when the region’s oil production was relatively low, the aid totalled $7.69bn.

The financial aid flow saw a steady decline in the following years because of weakening crude prices to reach $15.5bn during 1985-1989 and $13.4bn during 1990-1994, the AMF said in its 420-page annual Arab economic report.

Between 1970-2006, the Gulf financial assistance accounted for more than 94 per cent of the total aid of $129.1bn provided by the Arab countries.

Saudi accounted for the bulk of the financial assistance, extending around $84.9bn, nearly 65 per cent of the total. Kuwait was