KUWAIT CITY: Arab countries should not bow to pressure from Western countries to use their surplus funds to help resolve the global economic crisis, an Arab League official said in Kuwait on Wednesday.
“The natural place for Arab surpluses should be in Arab countries, Mohammad Al-Tuwaijri, Assistant Arab League Secretary General for Economic Affairs, told a meeting of Arab finance ministers and central bank governors.
Investments in the West by Arab funds have already incurred heavy losses, he said.
Tuwaijri also said Arab countries should “seriously carry out major economic restructuring to reduce the impact of the economic meltdown.
“Economic development in some Arab countries has been facing difficulties even before the global crisis broke out, and this will get worse now, he said.
Mustafa Al-Shamali, Kuwait’s finance minister, said Arab countries should face the economic downturn with common policies and measures.
“We are required to formulate a common policy to deal with the impact of the global crisis and limit its negative fallouts, he said.
The meeting aims to prepare a framework on ways to face the fallout from global economic turmoil, to be presented to leaders meeting at the Arab Economic Summit in Kuwait on Jan. 19-20.
Shamali said Arab countries have been affected by the economic crisis, especially due to a sharp decline in the price of oil, the main source of income for several Arab countries, and as foreign investments dropped.
The meeting reviewed several studies about the impact of the global crisis on Arab countries prepared by Arab economic organizations.
The Organization of Arab Petroleum Exporting Countries (OAPEC) said in a study that a drop of one dollar in oil price deprives Arab countries of between four and 10 billion dollars in revenues annually.
“This will lead to increased pressures on government budgets, a drop in spending and a disruption in the balance of payment, besides a decline in growth rates, it said.
A research paper submitted by deputy coordinator to the Arab summit Ali Suleiman, an economist, forecast that the global turmoil will lead to a drop of around 15 percent in Arab immigrant workers’ remittances in 2009.
Last year remittances from Arab workers, especially from the Maghreb, Egypt, Lebanon, Sudan and Jordan, reached around $25 billion.
Suleiman expected that expatriate workers in the oil-rich Gulf states, estimated at around 13 million workers, are likely to drop by 10 percent to 15 percent this year due to expected cuts in spending.
Arab countries should increase public expenditure and encourage private spending and investments to help cope with the downturn, Suleiman added.
The finance ministers are expected to approve some recommendations at the forthcoming summit.
