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GLOBAL FINANCIAL CRISIS IS AN OPPORTUNITY FOR REAL ECONOMIES
The GCC-wide conference themed 'Chartered Accountants - Adding Value to Global Economics' took place on 30th and 31st January 2009 at Diplomat Radisson, Manama, Bahrain organized by the Bahrain Chapter of the Institute of Chartered Accountants of India (ICAI). The conference focused on role of finance professionals / Chartered Accountants towards sustainable performance & management excellence, global financial crisis and role of Chartered Accountants, paths to the top - best practice leadership development for finance professionals, goal setting workshop, ERP selection & implementation, Islamic finance demystified, IFRS, fraud & forensic accounting etc. The conference was attended by the current president of ICAI - Mr. Ved Jain, past presidents of ICAI, ICAI administrators, members of ICAI from GCC, India and across the globe, renowned bankers, analysts, economists, regulators, legislators etc., across the globe.
Mr. R. Seetharaman, Chief Executive Officer - Doha Bank delivered the key note speech, on 'Global Financial Crisis - Role of Chartered Accountants and Paths to the Top - Best Practice Leadership Development for Finance Professionals'. Speaking on the occasion Mr. Seetharaman highlighted the current global crisis, its impact on the functioning of the global economy, the financial stability of the world economies, the economic outlook on the world economies in consideration to the current financial crisis and the policy changes that are required at a macro-economic level and financial/monetary level to come out of the current financial crisis. Further, he also explained the changes in the economic profile of countries and blocs. He analyzed the financial leverage that had taken place in the west resulting in growth of hybrid products, like derivatives, the creative accounting practices evolved on account of these hybrid-products etc.
Mr. Seetharaman explained what the global financial crisis meant to real commodity driven economies. He said 'Real commodity driven economies will experience limited access to funds, increased cost of procurement of funds, weak securities market, reduced cash flows for businesses, rise in credit losses, increase in balance sheet risks due to asset price deflations, lower profit levels among businesses, volatility in commodities market, reduction in trade freedom, more government intervention and shifts in consumer behaviour'.
Mr. Seetharaman also continued saying 'World growth is projected to fall to 0.5% in 2009, its lowest rate since World War II. Despite wide-ranging policy actions, financial strains remain acute, pulling down the real economies. A sustained economic recovery is possible only with the restoration of the financial sector's functionality and unclogging of credit markets. This requires new policy initiatives to produce credible loan loss recognitions, provide public support to viable financial institutions by injecting capital and carving bad assets. Monetary and fiscal policies need to become even more supportive of aggregate demand and sustain this stance over the foreseeable future, while developing strategies to ensure long-term fiscal sustainability. Moreover, international cooperation will be critical in designing and implementing these policies'.
Mr. Seetharaman also explained the measures to be implemented by real commodity driven economies to tide over this ongoing global financial crisis. He said 'Institutions should introduce crisis monitoring team, tighten the cash management system, allow credit subject thorough risk evaluation, initiate key working capital initiatives, look for opportunities to restructure debt, focus on cost & organizational efficiency, keep real-time communication with all stakeholders and adapt product portfolio to changing consumer behaviour'. He also highlighted the transformation required at every organization level to tide over this ongoing global financial crisis. He said 'Transformations include, looking out for continuous improvements in the way business is being conducted, reevaluation of performance standards, identification and exploitation of respective cutting-edge competitiveness, need for strong corporate governance and transparency frameworks and convergence principle of providing one-stop solution to all the customers needs'.
In his concluding remarks, Mr. Seetharaman said 'The ongoing global financial crisis is indeed an opportunity for all the real commodity driven economies to showcase their fundamental strengths and come out of the crisis stronger'.
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