De Rato advises Middle Eastern economies to diversify
| Author | Stephen Tokarick |
| Position | IMF Research Department |
| Pages | 313-315 |
Page 313
During the first leg of his trip, de Rato consulted with ministers of the six-nation Gulf Cooperation Council (GCC) in Jeddah, Saudi Arabia, where he welcomed the GCC's firm commitment to help maintain stability in the oil market by increasing production in response to growing demand-a move, he said, that will help sustain the current global economic expansion.
In recent decades, the GCC countries have witnessed unprecedented economic and social transformation. Their improved financial positions, relatively low external debt levels, and modernized infrastructure, he said,"reflect positively on management of oil wealth and show the fruits of opening borders to trade, capital, and labor." The Middle East region-particularly the GCC countries-has also benefited Page 314 from the recent global rebound, which has contributed to higher demand for oil and other exports.
"New challenges, however, are emerging," de Rato cautioned. To deal with intensifying unemployment pressures, the GCC countries will need to achieve higher sustained growth in their non-oil sectors and reduce their financial dependence on volatile oil export receipts. He welcomed the authorities' efforts to address these challenges by accelerating reforms. Increased regional integration, culminating in an efficient monetary union, would also strengthen the region's economic prospects. Significant progress toward regional integration has already been achieved, he said, but "the road to monetary union will require intensified efforts to ensure political consensus on critical economic issues and development of relevant convergence criteria, common data standards, and development of relevant institutions." GCC nations set up a unified customs union early last year, and plan a common market by 2007 and a single currency three years later.
Meeting with Saudi Arabia's Crown Prince Abdullah in Riyadh on October 24, de Rato noted the important role that Saudi Arabia plays in ensuring oil market stability and in furthering economic progress in the region. He commended Saudi Arabia's decision to increase oil production, take steps to boost capacity, and enhance coordination between producers and consumers.
De Rato also lauded Saudi Arabia's role in providing economic and financial support to Iraq and other countries in the region."The Kingdom's support has been critical," he...
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