(MENAFN- Kuwait News Agency - Arabic) The Governor of the Central Bank of Kuwait (CBK) Mohammad Al-Hashel on Monday inaugurated the 36th regular session of the Council of Governors of Arab Central Banks and Monetary Agencies, and noted the meeting comes amid great challenge related to the overall global economic slowdown and difficulties.
Addressing the inaugural session on behalf of His Highness the Premier Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah, Al-Hashel remarked the current Arab economic situation is linked to the global economic scene and comes with its additional unique challenges.
He stressed central banks have put in great effort in bolstering the member state's economic stability and they are the first line of defense against international economic crises. The Arab Monetary Fund is among the most active and productive Arab joint work bodies today, he also noted.
Recent changes on the political and economic scene brought a need to re-consider economic makeup and order and to re-adjust mechanisms with new challenges in mind, the CBK chairman said. "Strategic goals must be defined in a manner that addresses the new economic and monetary environment," he told the officials attending.
Coupled with the lingering effect of the euro crisis, the Arab economies are also weighed down by the rapid developments in their own domestic circumstance and ongoing change. The central banks also, he noted, suffer the burden caused by instability and problems rooted elsewhere. One major challenge is the lack of confidence in the business sector.
Where the CBK is concerned, the governor noted the bank's directives and measures resulted in local banks improving their risk management and follow-up mechanisms.
The bank has a regular pressure check mechanism in place, and is in the process of implementing Basel III recommendations and adjustments. CBK also has an early warning system against regulatory threats to economic stability. "The economic stability office had already assumed its duties in August 2011."
Arab Monetary Fund Director General, Chairman of the Board Dr. Jassim Al Mannai for his part addressed the officials saying the current regional and international state of affairs requires utmost caution and cooperation on the part of central banks.
State that had witnessed major political changes are now suffering from sharp drop in growth rates, alarming levels of unemployment, noticeable drop in investment, dwindling of reserves, depreciation of currency, hikes in inflation, on top of budget deficit and increase in debt.
"At a time when we need more expansion in monetary activity, we are experiencing hesitation and deterioration of capital bases of many institutions ...
The drop in developing nations economies stands to affect global trade and stands even to threated demand for oil, which is many Arab nations' key source of income."
"This is a major concern for oil producing Arab countries more than ever before, and the difficulties facing spending in recent years could be seen as a real threat in the event of oil dropping below USD 100 a barrel, which is not at all unlikely," the official warned.
The continued European debt crisis also worries the Arab region's institutions, "since Europe is the Arab region's first economic partner and market. Exchange of investment is crucial for both parties, and there is also the great number of migrant Arab workers across Europe to consider, Al-Mannai said.
"As a coordinating group and bloc, we would be more capable in facing these and related challenges and would be a more influencial party at all international arenas."
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