The International Monetary Fund (IMF) is not seeking more funds from Gulf Arab oil exporters to bolster its resources and the region faces no major danger from the eurozone debt crisis, the IMF’s Deputy Managing Director Nemat Shafik said on Saturday.
Some emerging economies, fearing the eurozone crisis could destabilise them, suggested giving the IMF more firepower to cope with threats to the global financial system when policymakers from the Group of 20 nations met in Paris last week. China, Brazil and India all favoured bolstering the IMF’s capital, G20 sources said.
But they ran into resistance from the United States and other big economies, burying the idea for now.
Asked whether the IMF was seeking more resources from Gulf Arab countries, Shafik, visiting Abu Dhabi for a meeting of finance ministers and central bankers from the region, told reporters, “No, at the moment, it is not our objective.”
Saudi Arabia’s central bank governor told Reuters last week that the IMF did not need more funds now and that he doubted any consensus on increasing IMF members’ quotas for contributions to the Fund was likely in the near future.
“The recapitalisation for what was agreed on for 2010 has not been implemented yet. So there is absolutely no discussion at this stage with regard between the IMF and the United Arab Emirates (UAE) regarding participation in any recapitalisation,” the UAE Minister of State for Financial Affairs, Obaid Humaid al-Tayer, said on Saturday.
He also told a news conference that the IMF had presented a paper on the global economic situation to Gulf policymakers in Abu Dhabi and had discussed expectations for how Europe would deal with its debt crisis. He did not give details.
Hopes for resolution
European Union (EU) leaders will meet on Sunday to see if they can agree on a plan to resolve the two-year-old crisis with another summit scheduled for October 26 because no breakthrough was expected on Sunday.
Shafik also said the impact of the eurozone crisis on the Gulf had been small so far as its exposure to Greece and Portugal was “very limited”.
“There is no major danger for the Gulf financial markets,” she said after the meeting. “The only concern is when there is any impact in the future on the price of oil.”
Brent crude oil prices have retreated from more than two-and-half year highs of $127 per barrel seen in April to nearly $99 earlier this month. They closed above $109 per barrel on Friday.
UAE Finance Minister Sheikh Hamdan bin Rashid al-Maktoum told the Saturday meeting that Gulf countries were able to fill any shortage of oil on international markets to keep prices stable.
“The GCC countries will be in a position to fill any shortage of oil on the international markets for the stability of oil prices,” Sheikh Hamdan told the meeting.
Gulf Arab economies rely on oil for most of their government spending. Governments across the region have boosted social spending this year as unrest swept much of the Arab world, including Bahrain, Oman and Yemen, which made budgets more vulnerable to a sudden fall in crude prices. — Reuters