|
Qatar Chamber of Commerce & Industry in collaboration with the Union of Chambers of the GCC organized 'The Symposium of the Repercussions of the Global Financial Crisis on the Economies of the GCC' on 15th April 2009 at Ritz-Carlton Hotel, Doha. The symposium was attended by diplomats, renowned bankers, businessmen, industrialists, analysts, economists, regulators, legislators etc., across the GCC.
Mr. R. Seetharaman, Chief Executive Officer - Doha Bank delivered the key note speech, on 'The Role of Banks & Financial Institutions in dealing with the Global Financial Crisis and repercussions on GCC Economies'. 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 like all the economies of GCC states, together jointly control 45% of world oil reserves and 18% of world natural gas reserves. He said 'Real commodity driven economies like GCC are likely to experience limited access to funds, increased cost of procurement of funds, volatility in securities market owing to market sentiments, 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 the financial sector 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 continued highlighting the proactive measures taken by various GCC governments to monitor and manage the current situation. Mr. Seetharaman while explaining on GCC's emergence as a role model for transformation on economic and social fronts said 'The increasing energy demand in last of couple of year world over had enabled GCC states to generate considerable fiscal surplus thereby substantially improving its balance of payments position which has further enabled them to invest wisely on various industrial and infrastructural projects. This has enabled the GCC states to gain expertise on diversification and grow on multi-dimensional front with renewed thrust on hydro-carbon sector especially creating additional facilities. On the social front all the important indicators such as healthcare system, literacy rate and women participation in governance indicate steady improvement resulting in significant transformation. Further, unified stance on most of the key issues be it currency union, controlling of inflation, management of its liquidity etc., are been continually addressed through regular coordination through multiple forums amongst the GCC states are making them stronger day by day'.
Mr. Seetharaman also explained the measures to be implemented by all the banks and financial institutions operating in the GCC states to tide over this ongoing global financial crisis. He said 'All the Banks and Financial Institutions should introduce crisis monitoring team, tighten their cash management system, allow credit expansion subject to thorough risk evaluation, initiate key working capital initiatives, look for opportunities to restructure their debts, 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 like GCC states to showcase their fundamental strengths and come out of the crisis stronger'.
|
 |