MANAMA, (Reuters) - The Managing Director of the International Monetary Fund (IMF) said on Saturday, May 12, that the Gulf Arab states must show the region is politically stable to attract more direct foreign investment.
Horst Koehler was speaking after meeting finance ministers and central bank governors of the Gulf Cooperation Council (GCC) in Bahrain on the global outlook for the world economy and GCC policies to cope with the situation.
"I do think that the region has to attract even more foreign direct investment, and they can do this, or promote this in demonstrating that first the region is politically stable. That is priority number one for investors," Koehler said. "And secondly, that the region is in a way integrating that foreign direct investors see the region as one location, not a fragmentation in six or seven states," Koehler told reporters in Bahrain.
"This approach is clearly in the mind of the ministers and I think this is very encouraging. I advise the ministers and the governments to accelerate this process," he added. Asked whether he sees the Gulf region as stable, he said: "I think it's remarkably stable, absolutely. It (GCC) demonstrates the stability."
Koehler said he was impressed by the fast recovery in the oil-rich GCC states — Bahrain, Saudi Arabia, Oman, Qatar, the United Arab Emirates and Kuwait — in 2000 after the improvement of oil prices.
"It's really impressing how the region recovered last year. Of course this has lot to do with the recovery of the oil price, but has equally to do with the right policy which had been implemented in the last two to three years," Koehler said.
Koehler praised GCC efforts to lessen the dependence of their economies on oil revenues and promoting investment by the private sector.
"The ministers talk with one voice about the need to continue with cooperation and integration, and this is very encouraging," he said.
Koehler also urged Gulf Arab states to eliminate subsidies and open up to foreign investors to meet the growing challenge of creating new jobs for their nationals and to work to unify their currencies.
"A single currency needs to be built on lots of conversions. This process of conversions is under way, but it has of course to be broadened and deepened," he told reporters.
Koehler said the slowing down of the global economy "will indeed be relatively short-lived."
"I don't see there is a need for pessimism. There is some degree of uncertainty, but no need for pessimism. If the right things are done, the global economy will grow."
By Abbas Salman
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