Single currency in 12 months

The leaders of the GCC states are expected to approve a final plan for the Gulf monetary union today.

The leaders of the GCC states are expected to approve a final plan for the Gulf monetary union and to set a new deadline of Dec 12 for the currency merger to be in place, Mustafa al Shimali, the finance minister of Kuwait said today. The monetary union plan, which is designed to eventually produce a single currency for five of the six Gulf states, must first be approved by the heads of the respective countries and ratified by their individual internal governments, before it can formally go into effect. The target date for a single currency is Jan 1, 2010.

"We have discussed the final draft of the monetary union agreement thus paving way for (GCC leaders to) signing it to see the light at a maximum date of Dec 12, 2009," Mr al Shimali said today at the GCC summit in Muscat, according to KUNA, the Kuwaiti state news agency. Oman, which was originally part of the single currency project, opted out in 2006. Having the monetary union agreement fully ratified and in place by the end of next year would not necessarily require the GCC states to also have the common currency in circulation by that date ? it would, however, be a sign that the GCC is making tangible progress towards the original goal.

"While the end goal is now beyond their reach, there are still steps that they can take that will show that the project still have momentum," said Simon Williams, chief economist at HSBC in Dubai. [e-mail]