RIYADH/DUBAI // Saudi Arabia poured up to US$3 billion (Dh11bn) into its banking system to ease tight conditions, bankers said today, as Gulf policymakers prepared to discuss a co-ordinated response to the global economic crisis. Saudi Arabia, the world's biggest oil exporter, and five other members of the GCC, which is preparing for monetary union, have responded separately so far to the world's worst financial crisis since the Great Depression.
This week's meeting follows a call from Saudi Arabia's highest economic body for Gulf states to look at how they can co-ordinate their policies as western economies head for a likely recession, threatening to put the brakes on a regional economic boom. Gulf-region central bank governors and finance ministers will meet in Riyadh on Saturday to explore how to cope with the global downturn, which has seen oil prices fall by almost half in three months and banks suffer from a credit crunch. Trying to boost confidence in their banking sectors, central banks and governments in the Gulf have guaranteed bank deposits, eased lending restrictions, set up emergency funds to bring down interbank rates and poured money into ailing stock markets. The Saudi Arabian Monetary Agency (Sama) took the latest step to stimulate interbank lending by pouring between $2bn and $3bn in the form of deposits with banks yesterday to ease liquidity pressures, bankers said. The central bank also pumped money into banks today, they said. Saudi interbank rates eased after the move, with the three-month rate falling to 4.6375 per cent from 4.65125 per cent. * Reuters