February 18, 2007	Sunday	Muharram 29, 1428

DUBAI, Feb 17: Gulf Arab monetary union, planned for 2010, will not be delayed, the secretary general of the Gulf Cooperation Council said in remarks published on Saturday.

The target for a single currency has been put in doubt after Oman, one of the six Gulf Arab countries planning union, said it would not join by 2010 because of concerns over convergence criteria.

I am sure it is not going to be delayed, though we are taking into account other countries in the region, Abdul-Rahman al-Attiya was quoted as saying by the United Arab Emirates-based Khaleej Times.

Bahrain's crown prince said earlier this month he doubted union could be forged by 2010 because of difficulties meeting convergence criteria for inflation, public debt and interest rates.

Gulf Arab states may opt for a monetary authority before forming a central bank, Attiya said. The location of the central bank has been politically sensitive, with both Bahrain and the UAE saying they wanted to host the bank.

My personal view is that we should complete the programme gradually by starting with a monetary authority and moving towards the final target, Attiya said.

Questions about the 2010 target have fired market speculation that Gulf states might change a system of dollar-pegged exchange rates set up to prepare for monetary union.

Currencies rallied across the world's top oil exporting region last month after the UAE said Gulf central banks were reviewing pegs to the dollar, which fell around 10 percent against the euro, fuelling imported inflation in several Gulf states.

Bahrain, the UAE, Saudi Arabia, Kuwait, Qatar and Oman are working towards monetary union, although Oman plunged the project into crisis when it said in December it would not join.

Omani officials have said criteria, including capping budget deficits at 3 percent of gross domestic product, could constrain Oman as it seeks to diversify its economy away from dwindling oil revenue.

Last week, Bahrain's central bank governor Rasheed al-Maraj said Gulf Arab states were sticking to their plans for a single currency, but called the 2010 deadline a challenge.

The UAE has said the Gulf was reviewing the entire currency project and hoped to agree on a simpler form of monetary union.

The speculation in currency markets reached fever pitch when UAE Central Bank chief Sultan Nasser al-Suweidi told Reuters last month Gulf states could decide at a March meeting in Riyadh whether to keep or change their exchange rate regime.

Oman and Bahrain, the smallest of the six economies, have ruled out any changes to their exchange rate policy as has Saudi Arabia, the world's largest oil exporter.—Reuters