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Gulf banks safe from Euro woes – Oman central bank gov

Gulf states should be largely unaffected by the euro zone debt crisis as their banks have minimal exposure to the bloc's debt, the head of Oman's central bank said on Friday, though he warned that they would not be immune to a broader global slowdown.

November 19, 2011 1:32 by

“Investments in European bonds by GCC (Gulf Cooperation Council) banks are not so high,” Oman Central Bank Executive President Hamood Sangour al-Zadjali told Reuters on the sidelines of a banking conference in Frankfurt.

“The impact (of euro zone problems) is not going to be great. However, our economies are dependent on oil; if there were to be any major slowdown in Europeand other parts of the world that would mean the impact on the oil price could affect us.”

“But oil prices have been keeping at a reasonable level so that makes us happy.”

While the outlook for the global economy has clouded over following the intensification of the euro crisis, oil prices have shown no sign of dropping to the psychologically significant $100-a-barrel mark.

For oil exporting countries like Oman, high oil prices strengthen national finances. Non-Opec producer Oman depends on crude for 69 percent of its budget revenue and the hydrocarbon sector accounts for 46 percent of economic output.

“We are preparing the budget for next year and there we have assumed that the oil price will be $75. But we think that is conservative pricing and we hope the real prices will be hovering around $100,” Zadjali said.

Oman’s recent growth and inflation forecasts also looked robust despite the rise inEurope’s woes, he added.

“The forecast for growth for this year and next year is 5 percent and inflation is around 4 percent,” he said, adding he did not foresee any revisions to those figures. (By Marc Jones and Eva Kuehnen; Editing by Hugh Lawson)

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