The Arab Monetary Fund (AMF) is unlikely to offer any funding assistance to the eurozone because providing loans to unrest-hit countries across the Arab world has priority, Director-General Jassim al-Mannai said yesterday.
“There is a big need in Arab countries, a constant need, taking into account the Arab Spring,” he told reporters on the sidelines of a meeting of regional bankers in the United Arab Emirates’ capital.
“Also, oil prices may drop because of weak economic growth ... I cannot see Arab [how] countries could help Europe,” he said.
EU leaders agreed at a summit in Brussels on Friday that eurozone states and other nations should provide up to 200 billion euros (US$270 billion) in bilateral loans to the IMF to help it tackle the zone’s debt crisis.
They envisaged 50 billion euros of the total coming from non-euro countries.
However, it is not clear which nations would be willing to provide the money.
The 22-member AMF provided loans worth about US$548 million to Jordan, Morocco and Yemen last year, the highest level of annual lending in the last 22 years, its annual report shows.
Egypt said last month that it would receive financing worth US$470 million from the AMF this year after its budget deficit ballooned in the wake of the February uprising that unseated former Egyptian president Hosni Mubarak.
The total value of loans extended by the AMF reached US$6.1 billion at the end of last year, while total assets stood at 3.1 billion Arab Accounting Dinars (US$14.5 billion).
In addition to going through the AMF, wealthy Gulf governments often extend international aid on a bilateral basis and they could potentially do so to help Europe, but the governments so far have not pledged any fresh money to either the IMF or the eurozone.
Mannai also said the AMF did not expect any negative impact on trade between Arab countries and Europe because of the eurozone debt crisis.
“Trade is going on. We cannot see a strong linkage of sovereign debt and trade between Europe and the Arab world,” he said.
“We should not expect any implications on trade,” Mannai added.
Although Europe is a big trading partner of the Arab world, many Arab countries have diversified their trade to other regions, he said.