Central bankers of the oil-rich Gulf Arab region have agreed on terms for a regional currency union that they hope will one day be like the eurozone, Bahrain's central bank governor said on Wednesday.
Until now the six Gulf Arab states - Saudi Arabia, Bahrain, Qatar, Kuwait, Oman and the United Arab Emirates - had made only modest progress towards laying the ground for a planned single currency by 2010.
All six currencies are now pegged to the dollar.
"We have agreed upon a formula to calculate the interest rate and that general budget deficits do not exceed 3 percent of the GDP," Rasheed al-Maraj, head of the Bahrain Monetary Agency, told reporters after a meeting of regional central banks.
"(Under the agreement) public debt should do not exceed 60 percent of GDP. And we have also agreed that the monetary reserves of each country should not to be lower than levels needed to cover consumer imports for four months."
The six nations control more than half of global oil reserves, have similar economies and form a loose political and economic alliance, the Gulf Co-operation Council (GCC).
Their plans for currency union have generally been regarded with scepticism. "What I'm cautious of is whether they can do it, because they all have different fiscal positions," said Hany Genena, economist, EFG Hermes in Cairo.
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