Government adviser urges Doha to drop peg to dollar

30 May 2008
Qatar’s senior economic adviser has made a fresh call for the state to depeg its currency from the flagging US dollar and insists the planned GCC-wide monetary union should also have the strength to sever ties with the greenback.

Ibrahim Ibrahim, economic adviser to Emir Sheikh Hamad bin Khalifa al-Thani, says he is “working hard” to convince the government that retaining the dollar link is not in the state’s interests.

“We have to delink,” he says. “It does not make sense to stay linked to a currency that is declining while our economy is growing. At a time when our currency should be going up, it is going down.”

His position contradicts Finance Minister Yousef Hussein Kamal, who told MEED in early May that Gulf states, including Qatar, would not revalue their currencies.

Ibrahim says Qatar is wary of making a unilateral move, however, and favours making any decision in tandem with other GCC states ahead of their planned monetary union by 2010.

“The problem is really how to deal with GCC countries in terms of the objective of having one currency,” he says. “We do not want to do anything that will disturb that.

The adviser, who is also secretary general of Qatar’s Planning Council, says the logic of cutting ties to the dollar also applies to a single currency, which he concedes is unlikely to be brought in by the 2010 deadline. “After we have it, I will not be in favour of any unity in currency being linked to the dollar,” he says. “It will be senseless to do that.”

He says one of the main reasons for creating a single, Gulf-wide currency is to give the region greater independence from swings in the international economy.

“We should have a policy that we are not linked to any currency,” he says. “Why do you need it? The currency by then will be big enough on its own.”

Few observers expect the 2010 deadline for the GCC single currency to be met. In 2007, UAE central bank governor Sultan Nas-ser al-Suweidi said that it may not even happen by 2015 (MEED 7:6:07).

GCC finance ministers and central bank governors are due to meet in September to review the currency union plan.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications