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12:29 GMT
KUWAIT, Jan 17 (KUNA) -- The first session of the "Private Sector and Civil Society Forum," held on the sidelines of the Arab Economic Summit, was dedicated Saturday to discussing the global economic crisis and the role of Arab institutions in tackling this issue.
Governor of the Central Bank of Kuwait (CBK) Sheikh Salem Abdulaziz Al-Sabah presented the major elements of the current global financial meltdown and the main lessons that could be learned from it in order to seek means to protect the Arab financial and banking sectors from negative impacts.
He said the economic crisis was rooted in the fast-paced expansion in banking activities around the world over the past few years, especially in advanced countries.
The governor noted that one problem was the lack in regulations governing financial transactions in many markets of the world, especially those related to banking, investment, funds, mortgages and insurance, and the repercussions of this diversity in financial tools coupled with the increase in lending to raise the finances available to institutions.
Sheikh Salem said that as a result of these diversified and unmonitored financial transactions, the impact of procedures taken by monetary authorities was greatly limited, thus reducing the effectiveness of traditional financial policy tools.
The governor also said that the globalization of financial transactions, in light of communication revolution, was another aspect contributing to the crisis.
As to the elements that contributed to curbing the impact of the global financial crisis on the Arab banking and financial sectors, he said they included the fact that this region did not suffer from a credit crunch, not had a severe liquidity shortage, adding that there was limited dealing in financial derivatives -- unlike the US and other developed economies.
He said, however, Arab banking and financial sectors were not immune to negative impacts of the crisis in the future, thereby warranting increased efforts to fortify the status of these institutions in order to counter any problems that may arise.
Sheikh Salem underscored the importance of implementing risk management programs in the banking and financial sectors, as well as boosting these systems.
On his part, President of the Arab Monetary Fund Dr. Jassem Al-Manaei presented his vision on joint Arab action and how the Arab states could benefit from this crisis, calling for forging a relationship between banking supervision and monetary policies, while increasing funds for investments and limiting spending.
He also called for reviewing foreign investments which suffered great losses provided that the investment climate was improved and made more attractive to investors.
He noted, however, that discovering the holes in liberal economy did not mean going back to directed economy, adding that government intervention in economy at present should be temporary and not become the norm.
Meanwhile, Vice President of the World Bank for MENA Daniela Gressani said the global economic crisis would greatly impact all economic indices in 2009, whether in terms of global economic or commercial growth.
She noted that Gulf states suffered from the crisis because of the drop in oil prices, while the liberal bloc -- Egypt, Morocco and Tunisia -- will be affected through foreign resources like tourism, while the third group -- Jordan, Yemen, and Lebanon -- will be less affected. The final group -- Syrian, Algeria and Libya -- will suffer the least as they were not linked to the previous groups.
She said that the World Bank's business environment index showed that all Gulf states ranked between 16 and 57 out of 160.
As for President of the General Council for Islamic Banks and Financial Institutions Sheikh Saleh Kamel, he said Arab states must draw an economic methodology based on freedom of the individual in owning and managing productions, while placing the collective interests above the individual ones. (end) kt KUNA 171529 Jan 09NNNN