Press Release No. 03/79

Press Release: IMF Managing Director Underscores Importance of Strengthening Economic Cooperation in the Middle East

June 6, 2003

Mr. Horst Köhler, Managing Director of the International Monetary Fund (IMF), issued the following statement today after a meeting on June 5, 2003 in Doha, Qatar, with the finance ministers and central bank governors of the Gulf Cooperation Council (GCC):

"I appreciate the opportunity to meet again with the finance ministers and central bank governors of the GCC, and I welcome their offer to address the important role of the Middle East in the global economy and the policy challenges ahead. I would also like to thank H.E. Yousef Kamal, Minister of Finance, Qatar for hosting this meeting.

"This is an uncertain period for the Middle East region, and the global economy more generally. I have reason to be optimistic, nevertheless. The evolving regional environment has not only thrown up new challenges but also opportunities for reinvigorating growth. The authorities appreciate that strengthening of economic cooperation under sound macroeconomic and structural policies will foster sound and sustainable economic development. Looking beyond the region, the headwinds that have held back growth globally are also diminishing, although vigilance is necessary given the current balance of risks to global growth.

"The GCC countries have witnessed unprecedented economic and social transformation in recent decades. Large official foreign assets have been accumulated, relatively low external debt levels have been maintained, and infrastructure has been significantly modernized. These are achievements that reflect positively on management of oil wealth, and show the fruits of opening borders to trade, capital, and labor. New challenges, however, are emerging. Non-oil growth will need to increase in a sustained fashion to address unemployment pressures in some GCC countries and the financial dependence on volatile oil export receipts will have to be reduced to protect against vulnerability to terms of trade shocks. It is gratifying to note that the authorities are intensifying their reform efforts to address these challenges. Undoubtedly, increased regional integration culminating in an efficient monetary union will help in this process.

"For the Middle East region overall, strengthening institutions, adapting the role of the state to the needs of a modern market-based economy, and creating appropriate incentives for private sector initiative through more liberalized trade and financial regimes, will go a long way toward strengthening economic performance. The IMF stands ready to assist the region in this process."