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MENAFN - Arab News - 08/12/2013

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(MENAFN - Arab News) Bank credits destined for the private sector are poised to grow by 15.3 percent in the Kingdom in 2014 compared to 15.6 percent in 2013, the highest among the GCC countries, local media said quoting a report.
Qatar has the second largest bank credit growth in the GCC countries predicted in 2014 at 14.7 percent (compared to 12.9 percent in 2013), followed by Oman at 12.6 percent (versus 14.3 percent), and the United Arab Emirates (UAE) at 8.4 percent ( versus 6 percent in 3013), the report, issued by the International Monetary Fund (IMF), said.
Despite low interest rates, there is a discrepancy in the growth of bank credits given to the private sector in the GCC countries. However, the financial institutions in the region are characterized with solid positions despite the increasing rates of non-performing loans (NPLs) in Bahrain and the UAE last year, the report said.
According to the report, conditions of macroeconomic policies remained appropriate in the short term in most of the GCC countries despite need for fiscal curbs in the medium term.
Following the expansion of fiscal policies in 2011, fiscal deficit of nonoil sector has appropriately narrowed in 2013 in Oman, Qatar, Saudi Arabia, and the UAE, the report said.
Meanwhile, the fiscal deficit of non-oil sector is expected to widen in Bahrain and Kuwait, which arouses concern notably in Bahrain due to the increase of government debts at higher levels, the report said.
The banking institutions in the GCC countries are enjoying good position in their capitals and have enough provisions for bad loans (debts). However, bad loans remain are still high and the possibility of debt re-structuring process for government-related entities could increase the level of debts, the report said.
In this context, the IMF has appreciated banking measures taken by the Kingdom which was the first countries to apply Basell II rules (aimed to boost financial strength) as other countries plan to apply similar measures at gradual steps until the year 2019, the report pointed out.
Basel II, initially published in June 2004, was intended to create an international standard for banking regulators to control how much capital banks need to put aside to guard against the types of financial and operational risks banks (and the whole economy) face. One focus was to maintain sufficient consistency of regulations so that this does not become a source of competitive inequality amongst internationally active banks.


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