CAIRO (AP) – Saudi Arabia has no plans to de-peg its currency from the U.S. dollar, the oil-rich nation’s central bank governor said Monday.
Mohammed al-Jasser also said there was still no fixed date for setting up the Gulf monetary union. The plan, which calls for the creation of a unified regional currency and central bank, has hit repeated roadblocks. The absence of a fixed deadline indicates that the six-nation Gulf Cooperation Council has yet to iron out key wrinkles in the plan.
“It’s to be expected that the monetary union will take some time,” said John Sfakianakis, chief economist at the Riyadh-based Banque Saudi Fransi-Credit Agricole Group. “I think we’re talking much later — beyond 2015.”
Gulf nations have been struggling with the plan for several years. Currency unification plans suffered a major blow after Oman, followed by the United Arab Emirates, said they would not participate for now.
Sfakianakis said the main impediments appeared to be political commitment to the plan.
Saudi Arabia was selected as the home of the future regional central bank — a move that angered officials in the UAE, the Arab world’s second largest economy and home to the region’s financial hub Dubai.
The kingdom, which sits atop the world’s largest proven reserves of conventional crude oil, has increasingly been flexing its oil-fueled financial muscle. It is the only Arab nation to be a member of the Group of 20 leading rich and developing nations.
While talk grew increasingly strident over the past two years to de-peg the nation’s currencies from the dollar, Saudi appeared to stay firm even as the U.S. currency took a drubbing because of the global financial meltdown.
Al-Jasser reiterated that stance on Monday, saying the country had no plans to shift to a different peg.
All the GCC nations, except for Kuwait, link their currencies to the dollar. It remains unclear if the new unified currency would be pegged to the dollar or to a basket of currencies like the one Kuwait uses.
Al-Jasser also said the Saudi economy was projected to grow at 3.8 percent in 2010. That is a marked improvement from the 0.6 percent GDP growth in 2009 — a level sustained largely because Saudi continued with a $400 billion investment plan to boost its infrastructure and support and develop key services.
Sfakianakis said he was expecting the Saudi economy to grow at a healthy 4.3 percent in 2011, a level comparable to predictions by other economists and analysts.
Saudi Finance Minister Ibrahim al-Assaf said late Saturday he expected the economy to grow at about 4 percent, pulled ahead by the private sector.