Press Release No. <a name="P13_75"></a>04/222

Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), issued the following statement today after a meeting in Jeddah, Saudi Arabia, with the finance ministers and central bank governors of the Gulf Cooperation Council (GCC):

"I appreciate the opportunity to meet with the finance ministers and central bank governors of the GCC. These gatherings provide a great opportunity for the GCC countries to discuss challenges facing the region and explore policies needed to address them. I would also like to thank H.E. Ibrahim A. Al-Assaf, Minister of Finance, Saudi Arabia, for hosting this meeting.

"The global economy is experiencing strong and broad-based growth. I welcome the GCC authorities' firm commitment to help maintain stability in the oil market by increasing production in response to the growing demand, thus helping to sustain the ongoing global economic expansion. I also endorse strengthening economic cooperation among the GCC countries supported by sound macroeconomic and structural policies, which will foster steady and sustainable economic development across the region.

"The GCC countries have witnessed unprecedented economic and social transformation in recent decades. They have accumulated large official foreign assets, maintained relatively low external debt levels, and modernized infrastructure significantly. These are achievements that reflect positively on management of oil wealth, and show the fruits of opening borders to trade, capital, and labor.

"The Middle East region and particularly the GCC countries have benefited from the global rebound which contributed to the sharply higher demand for oil and other exports. Higher international oil prices over the past two years have helped strengthen the financial position of the GCC countries significantly. Authorities in the GCC countries have been using the higher oil revenues prudently by building up assets and reducing debt, as appropriate, and also allocating resources for the priority social sector programs and infrastructure development.

"New challenges, however, are emerging. Non-oil growth will need to increase in a sustained fashion to address the intensifying unemployment pressures in the GCC countries, and the financial dependence on volatile oil export receipts will have to be reduced. I welcome the efforts of the GCC authorities to address these challenges by accelerating reforms. Undoubtedly, increased regional integration culminating in an efficient monetary union will also help the regions' economic prospects.

"Significant progress toward regional integration has already been achieved: barriers to free movement of goods, services, capital and national labor have been largely eliminated; a common external tariff is now in place; all GCC countries have sound financial systems and prudential regulations and supervision of the banking sector are being gradually harmonized. Nonetheless, the road to monetary union will require intensified efforts to ensure political consensus on critical economic issues and development of relevant convergence criteria, common data standards, and development of relevant institutions. The IMF stands ready to assist the GCC members by providing policy advice and technical assistance in our areas of competence and expertise."