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IMF chief upbeat on Gulf growth

posted on 07/10/2012: 1633 views



The head of the International Monetary Fund has predicted that the economies of the oil-rich countries of the Gulf Cooperation Council will grow at sustainable but reduced rates.

Christine Lagarde, the managing director of the IMF, spoke at a news conference on Saturday after attending a meeting of the six-nation GCC.

IMF chief Christine Lagarde praised Gulf oil exporters for their help in stabilising the global economy by managing oil prices, despite complaints by some Western countries that energy costs are still too high.

"It gives me an opportunity to thank the GCC countries for their ... stabilising role in the global economy because of the good monitoring and good management of oil prices,” the International Monetary Fund's managing director said.

In return, Saudi Finance Minister Ibrahim Al-Assaf praised the role of the IMF in dealing with regional economic woes in the wake of the Arab uprisings that replaced long-time leaders in Egypt, Tunisia, Yemen and Libya and rattled local economies.

Lagarde was speaking at a news conference after meeting with senior officials of the Gulf Cooperation Council, which groups six wealthy oil-exporting countries — Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman.

Since OPEC ministers last met in June, Brent crude oil prices have surged about 20 per cent and have hovered around US$112-US$117 a barrel since mid-August, despite fragile economic growth in many consuming countries.

Last month, head of the International Energy Agency (IEA), which represents 28 importing countries said high oil prices were a concern for these nations.

In effort to cap high oil prices, sources told Reuters the United States is considering an emergency oil stocks release. Other members of the IEA, such as France and Great Britain, could also join the move. The Gulf states have managed to maintain high production levels, making up for lower supplies from Iran because of sanctions, and outages in the North Sea.

Top oil-exporter Saudi Arabia's supply remained steady at 9.8 million barrels per day (bpd) in July and August, off multi-decade highs of over 10 million bpd earlier in the year.

The big three Gulf OPEC producers -Saudi Arabia, Kuwait and the United Arab Emirates -collectively increased supply by around 400,000 bpd thanks to a 600,000 bpd jump in Kuwaiti production to 3 million bpd.

Earlier this year, GCC members pledged billions of dollars in additional financial resources to the IMF, and they have promised billions more in aid to poorer Arab states since last year's uprisings in the region.

Oil Spending

Oil producers in the Middle East and North Africa plan to invest US$740 billion energy projects in the next five years, led by Saudi Arabia, according to Arab Petroleum Investments Corporation.

Saudi Arabia tops the list with committed investments of US$165 billion, mostly generated by Saudi Arabian Oil Co. and Saudi Basic Industries Corporation, followed by the UAE that plans to invest US$107 billion in the period, the lender known as Apicorp said in an e-mailed report.

Algeria overtook Qatar and Iran as the third-biggest investor, with US$71 billion of potential spending, largely the result of catch-up investment. Iran's energy spending programme has been put at US$68 billion.

"Tighter international sanctions, and the retreat of foreign companies, have ended up taking a toll on Iran's elusive energy investment program,” Apicorp said.

Countries in the region can finance projects on their own as long as the basket of OPEC crudes stays at more than US$100 a barrel, the report said. That's US$10 higher than last year's review. The OPEC crude basket was at US$106.99 as of Oct.4, according to data compiled by Bloomberg.

The review covers projects in the oil, gas, petrochemicals and power industries that are likely to see final investment decisions being taken. The bank selected the developments from more than 200 planned and announced public and private projects in the region estimating in size from US$100 million to US$20 billion, it said. – Agencies

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