Monetary union on schedule in 2010

The GCC states have completed the requirements for a monetary union, which will be the first of its kind in the Middle East. (ASHOK VERMA)

The GCC countries have almost completed the requirements for a landmark monetary union and will announce its birth on schedule in 2010, the group's secretary-general was quoted as saying yesterday.

Abdul Rahman Al Atteya said the implementation of the Gulf common market has also progressed smoothly since it was launched at the start of this year.

"The implementation of the common market is moving according to the timetable and we have moved from the preparation stage to the implementation stage," he told businessmen in Jeddah late on Thursday.

"The year 2010 will also be the date of the declaration of the monetary union and unification of the currency… this will be a culmination of the GCC merger," he said in remarks carried by Al Hayat and other Saudi newspapers.

Speaking to reporters in Dubai on Thursday, UAE Central Bank Governor Sultan bin Nasser Al Suweidi said the GCC states had almost finalised the monetary union deal and it would be presented to the finance ministers and the central bank governors when they meet again in September.

GCC heads of state will discuss recommendations by their finance ministers on the monetary union when they meet in Oman.

"As for the single GCC currency, it could be linked to a basket or stay with the dollar or could be floated… but this decision is to be taken later," said Abdul Aziz Al Owaishik, a minister at the GCC Secretariat in Riyadh. "But it is extremely important that the currencies of the GCC countries must have a peg before the creation of the monetary union… it does not matter whether this peg is the dollar or a basket. As for Oman, it has announced that it will not be part of the union but can join it at a later stage," he said in Jeddah.

The GCC currencies are pegged to the dollar, except for the Kuwaiti dinar, which was attached last year to a basket of major global currencies, in which the greenback is the main component. The monetary union, which follows the launching of the GCC common market and customs union, will be the first of its kind in the Middle East. It will give birth to the world's largest oil bloc, with crude reserves of nearly 480 billion barrels, just less than half of the world's total recoverable crude wealth. Their gas resources of 40 trillion cubic metres also account for nearly a fifth of the world's natural gas deposits.