Bahrain pushes for a Gulf stability fund
The proposal also aims to bridge economic disparities within bloc.
July 21, 2010 11:26 by Reuters
Bahrain, the smallest economy in a six-nation Gulf Arab economic bloc, is pushing for the creation of a regional stability fund to counter potential fiscal crises, its finance minister said in published remarks.
The fund should also work on bridging economic disparities among the member states of the Gulf Cooperation Council (GCC), Sheikh Ahmed bin Mohammed Al Khalifa said in an interview published on the bloc’s July news bulletin Almaseera.
The GCC aims to forge an economic and monetary union emulating the euro zone, some of whose members have recently run into serious fiscal problems.
Debt problems at Dubai’s flagship state conglomerate Dubai World have raised concern among officials in some GCC member states.
“Bahrain put forward in December … a proposal to set up a fund dedicated to support fiscal stability and economic growth in GCC countries. The proposal is currently under examination,” Sheikh Ahmed said in the undated interview.
“The proposal aims mainly at creating a mechanism that would provide necessary support to member states if needed, in a way that would ensure both a convergence of economic models within the GCC and similar standards of living for its citizens,” he added.
Bahrain is a small oil producer and does not have the fiscal clout of other GCC member states.
It ran a budget deficit last year for the first time in at least four years as oil prices remained below its budget breakeven estimated at $70 to $80 per barrel, one of the highest in the Gulf.
The fund would support any GCC member state affected by “urgent fiscal and economic crises, to help counter the negative repercussions of these crises on both the affected member state and the region as a whole,” he said.
GCC’s economic integration efforts have been dogged by delays in the monetary union plan and regional rivalry and mistrust between its two biggest economies, Saudi Arabia and the United Arab Emirates.
The other GCC member states are Kuwait, Oman and Qatar.
(Reporting by Frederik Richter and Souhail Karam; Editing by Andrew Callus/Ruth Pitchford)