DUBAI // Saudi Arabia plans to extend 10 billion riyals (Dh9.8 billion) in credit to low-income citizens as Gulf Arab oil-producers step up efforts to contain the fallout from the global financial crisis. Saudi's King Abdullah ordered that the additional funds be deposited in the Saudi Credit Bank, which was established to extend interest-free loans to Saudi citizens with limited resources to help them overcome financial difficulties.
The move comes on the heels of an emergency meeting of Gulf finance ministers and central bankers held in Riyadh yesterday which was aimed at better co-ordinating the response to a global downturn that threatens to brake their region's six-year economic boom. The six-members of the Gulf Cooperation Council (GCC), preparing for a single currency by an unlikely 2010 deadline, said they were confident that economic growth would continue but were ready to take any steps necessary to shore up their economies and restore confidence.
The GCC members "are satisfied with the measures taken by the countries of the council so far to deal with any possible fallout from the global financial crisis and ready to take any additional measures". Saudi Arabia, the United Arab Emirates and four other Gulf states have so far adopted separate policy responses to defrost interbank lending and boost investor confidence in their stock markets. The GCC also includes Qatar, Kuwait, Bahrain and Oman.
Some Gulf states have guaranteed bank deposits, eased lending restrictions, set up emergency funding facilities for their banks and bought stocks that have fallen across the region as confidence plummets. The Saudi finance minister Ibrahim al-Assaf said after yesterday's meeting that he was confident that the GCC countries would see their economies grow an average of 4-6 per cent in 2008 despite the global economic downturn.
"The danger in this crisis is that indicators are pointing to a recession ... in developed countries which suggests that the fallout from this crisis is moving into the real economy, which could carry direct and indirect effects on the economies of the council," Mr al Assaf said. "This requires all of us to work together to avert the negative effects and reduce their impact on our economies." He said any slowdown in growth rates in the Gulf Arab region would be the result of a slowdown in the oil sector, as oil prices fall.