His Highness Alsaid Asad Bin Tareq Al Said, the representative of His Majesty the Sultan, stressed that the economic developments in the Sultanate were noticeably favorable despite the regression of global economic performance after the events of September 11th.
During his inauguration of the sixth GCC Banking Conference yesterday at the Bustan Palace Hotel, he emphasized that the wise policies followed by the sultanate have resulted in improving the government’s financial status and an increase in the country’s foreign assets, especially those of the sultanate’s general reserve.
His Highness said: “The performance of the global economy during the previous period witnessed a noticeable regression as a result of numerous factors represented in the decelerating economic growth of the USA, the European Union and Japan.
He elaborated saying: “That deceleration was enhanced by the events the USA witnessed on September 11, 2001.”
Also at the conference, Mr. Talal Abu-Ghazaleh, Vice-Chair of the United Nations Information and Communication Technologies Task Force (UN ICT TF), stated that “finance is a form of mediation, a symbolic language that facilitates communication, assessment and enhancement of value” , especially since the countries of our region face challenges of trade liberalization, regional and international integration and global competition.
He added: “A healthy and stable financial system, supported by sound macroeconomic management and prudent regulation, is an essential requirement for sustained economic growth.
The subjects which our distinguished speakers will be addressing here today and tomorrow, such as common currency, trade liberalization, detection of suspicious financial transactions, the Basel Accord and corporate governance, are all related to globalization and its challenges. The Arab world is standing at many crossroads. We have many choices to make. But the one thing central to our economic prosperity is the need for a secure and dynamic banking sector that can support the economy as a whole.”
He elaborated further that “a global agreement on financial services based on the Most-Favored-Nation principle (MFN principle) had eluded negotiators on two occasions (at the end of the Uruguay round and again in July 1995) until some 102 WTO Members managed to conclude a far-reaching set of commitments to financial services in December 1997.”
On December 13, 1997, 104 nations signed the Financial Services Agreement (FSA), that confirmed the commitments of the signatories to open their financial markets and expanded the scope of the General Agreement on Trade in Services (GATS) to cover financial services.
He said “Today, 113 WTO Members including China, have binding commitments in this sector- more than in any other sector except tourism.”
Abu-Ghazaleh talked about this issue in more detail, stating: “The positive approach of the GATS commitments, unlike in GATT, is that countries agree to “lock in” the level of openness that they can commit to, after that, other nations can count on them no deviating from that commitment. It is also built upon the principle of continuing improvement in members’ commitment to market access. What this means in that countries is that they agree to lock in only those commitments that they specifically list. If they do not list it then it is not included. Perhaps, alternatively, a negative list approach, similar to GATT, in which everything was included for all participants, except that which they specifically negotiated not to include, would have accomplished more than a positive list approach.”
He said: “What we constantly need is a firm organizational and administrative structure for our financial sector that all other productive sectors depend on. It is from this perspective that the significance of the New Basel Capital Accord takes place. This accord is being issued by the Basel Committee of the Bank for International Settlements. The proposal is based on three mutually reinforcing pillars that allow banks and supervisors to evaluate properly the various risks that banks face.
The first of these pillars is minimum capital requirements, which seek to refine the measurement framework set out in the 1988 Accord. The second is monitoring by supervisory bodies on the amount of capital and internal related evaluation procedures. The third is the market system that provides more effective disclosure, resulting in safer banking activity.
I am confident that our intense study of the New Basel Capital Accord will assist in completing further structural improvements in our economies, which will serve the national interest. One of the lessons we learn from other countries is that before we liberalize our financial sector and open it up to external competition, and before we seek further regional and international integration, we must continue to improve our internal structure. It is worth noting that trade liberalization under the WTO will help develop our economies through their structures. This in the long run will serve the financial sectors and in particular the banking sectors. Yet we must not rush in this direction without adequate preparation. This is because there are structural, administrative and organizational issues that need to be addressed by decision-makers to reform and liberalize financial activities.
In addition to this, I find it my duty –as the representative of the UN ICT TF and the ICC EBITT Commision- to state that we must be careful in our deliberations both within and outside this conference, and take into consideration the effects of IT and telecommunications on the financial and banking sectors, both presently and in the future.”
At the end of his speech, Abu-Ghazaleh concluded by saying: “Our wise ancestors taught us that “the best way to predict the future is to shape it”. I am more than confident that the leaderships of the GCC, political and economic, and throughout the Arab world, are determined to shape, with us and for us, the future predicated on our cultural and moral heritage, on our historic contribution to human progress, for several centuries and our commitment to resume the role we are worthy to undertake in leading all of us to a better world.”