x Abu Dhabi, UAEFriday 21 July 2017

Ministers to meet in capital on economic turmoil

Arab finance ministers meet in Abu Dhabi, seeking to help rebuild Arab Spring economies amid deepening concerns about global growth.

Obaid Humaid Al Tayer, the UAE Minister of State for Financial Affairs, second from right, and other delegates at the meeting of the GCC Financial and Economic Co-operation Committee in Abu Dhabi in May. Andrew Henderson / The National
Obaid Humaid Al Tayer, the UAE Minister of State for Financial Affairs, second from right, and other delegates at the meeting of the GCC Financial and Economic Co-operation Committee in Abu Dhabi in May. Andrew Henderson / The National

Arab finance ministers will meet in Abu Dhabi today against a backdrop of economic uncertainty across the region and the rest of the world.

The meeting is being convened after unprecedented instability fanning out from Tunisia across North Africa and the Middle East in recent months.

How to bring economic stability to a region rocked by unrest will be an important topic. Finance ministers from all Arab countries are expected to attend the exceptional meeting of the Council of Arab Ministers of Finance, with the only uncertainty being whether a representative of Libya's National Transitional Council (NTC) will participate.

The IMF, the World Bank, the Arab Monetary Fund and other multilateral lenders will be represented.

Raising financial aid for Libya may be discussed, said a person familiar with the meeting.

Gulf leaders have previously pledged billions of dollars of financial support for Egypt.

The UAE has already taken a leading role in supporting the NTC, hosting a meeting of global financial backers of the rebels in June.

Ministers will also discuss cooperating more closely on food security, and on trade and taxes to boost growth across the Arab world.

The UAE Ministry of Finance will offer proposals to improve food security in the region. Rising prices of food staples this year have created the risk of inflation in many countries heavily reliant on food imports.

Escalating prices were an aggravating factor in the uprisings in Tunisia and Egypt.

"In addition to focusing on meeting living and food requirements in Arab states, the initiative will also feature mechanisms and systems … for following up on progress," said Obaid Humaid Al Tayer, the UAE Minister of State for Financial Affairs. But volatility in world financial markets and concerns about slower global growth in recent weeks are likely to be high on the agenda.

Regional stock markets have been dragged into the turmoil, with many local bourses affected by the sell-off.

Worries about the European and US economies in particular have major implications for the region.

The US and Europe are important trading partners for many Arab states, with a large portion of North African exports heading to Europe.

Meanwhile, Gulf states have exposure to the US economy through local currency pegs and by holding large amounts of US treasuries.

Countries affected by the so-called Arab Spring will also be concerned that the US and European debt crisis could deflect global attention from their own efforts to rebuild their economies.

Any slide in global growth could also push oil prices down. Any drop in prices would hurt oil revenues for Gulf states, while helping ease financial pressures on regional oil importers.

"The push to strengthen regional integration and coordinate policies at this time highlights the sense of concern about global events and need to ward off the effects of financial market turbulence," said Tim Fox, the chief economist at Emirates NBD.

tarnold@thenational.ae