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IMF says not seeking more funds from Gulf states

Current funds are sufficient with the Middle East facing no major fiscal danger from Europe's debt crisis, says IMF official

Reuters, Saturday 22 Oct 2011
Funds are sufficient for now, says IMF (Photo: Reuters)
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Views: 1212

The International Monetary Fund is not seeking more funds from Gulf Arab oil exporters to bolster its resources, and the region faces no major danger from the euro zone debt crisis, the IMF's Deputy Managing Director Nemat Shafik said on Saturday.

Some emerging economies, fearing the euro zone crisis could destabilise them, suggested giving the IMF more firepower to cope with threats to the global financial system when policymakers from the Group of 20 nations met in Paris last week. China, Brazil and India all favoured bolstering the IMF's capital, G20 sources said.

But they ran into resistance from the United States and other big economies, burying the idea for now.

Asked whether the IMF was seeking more resources from Gulf Arab countries, Shafik, visiting Abu Dhabi for a meeting of finance ministers and central bankers from the region, told reporters: "No, at the moment, it is not our objective."

Saudi Arabia's central bank governor told Reuters last week that the IMF did not need more funds now and that he doubted any consensus on increasing IMF members' quotas for contributions to the Fund was likely in the near future.

Shafik also said the impact of the euro zone crisis on the Gulf had been small so far as its exposure to Greece and Portugal was "very limited".

"There is no major danger for the Gulf financial markets," she said after the meeting. "The only concern is when there is any impact in the future on the price of oil."

Brent crude oil prices have retreated from more than two-and-half year highs of US$127 per barrel seen in April to nearly $99 earlier this month. They closed above $109 per barrel on Friday.

United Arab Emirates Finance Minister Sheikh Hamdan bin Rashid al-Maktoum told the Saturday meeting that Gulf countries were able to fill any shortage of oil on international markets to keep prices stable.

Gulf Arab economies rely on oil for most of their government spending. Governments across the region have boosted social spending this year as unrest swept much of the Arab world, including Bahrain, Oman and Yemen, which made budgets more vulnerable to a sudden fall in crude prices. 

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