Oman ‘will not join Gulf monetary union in 2010’

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Oman has informed the other GCC states that it will not be joining the proposed monetary union on the planned date in 2010, a Gulf official said yesterday as the leaders of the Gulf countries gathered here for a summit meeting.

“They feel they are not going to be ready by 2010 ... Rather than delay the process, they want the other countries to move ahead, and they can join at a later date,” said the official, who asked not to be named.

He said Oman had obtained the approval of other members of the six-nation group for its plan to stay out. Oman had last month cast doubt on the timetable for the single currency project, suggesting the agreed 2010 deadline might not be met and that other nations shared this concern.

The GCC leaders earlier arrived in Riyadh for the two-day summit aimed in part at helping resolve problems over the monetary union and a customs union that will bring together some of the world’s most energy-rich nations. The sultanate, the second smallest Gulf Arab economy, had said the union might need more time, citing slow progress on a customs union that went into effect in 2003 but has not been implemented to the full satisfaction of member countries. The official said the decision was positive because it would not hold up the other countries in the proposed union. “They said they would like to keep attending committee meetings but without voting (rights),” he said.

The six countries have agreed five criteria for European Union-style economic union, including capping budget deficits at 3% of gross domestic product, public debt at 60% of GDP, and inflation at the GCC average plus 2%. Interest rates are to be no higher than the average of the lowest three states plus 2% and countries must have foreign exchange reserves to cover 4-6 months of imports. The economic targets are achievable but Gulf states had made little progress on a customs union that went into effect in 2003 to help prepare for integration, Oman’s central bank governor Hamood Sangour al-Zadjali said last month.

GCC Secretary General HE Abdul Rahman al-Attiyah said later the launch of a single currency was still on track for 2010 and he had not received any request for a delay. The summit is also expected to consider a proposal made last year to limit to six years the stay of expatriate workers. An estimated 12mn foreigners live in GCC countries and represent more than 80% of the population in some cases.