ABU DHABI, Dec 19: Gulf Arab leaders endorsed criteria for European-style monetary union in the world’s biggest oil exporting region on Monday and agreed to forge a common policy on negotiating trade agreements.

But they did not announce any decision on how and when the six Gulf Cooperation Council (GCC) states would start moving toward a single currency.

The leaders endorsed the monetary and financial criteria (that will lead to) the success of monetary union, a summit statement said.

Bureaucrats of the United Arab Emirates, Saudi Arabia, Oman Qatar, Bahrain, and Kuwait have agreed five macro-economic and budgetary criteria for monetary union by 2010.

The criteria cap budget deficits at 3 per cent of gross domestic product, public debt at 60 per cent of GDP, inflation at the GCC average plus 2 per cent and interest rates at the average of the lowest three states plus 2 per cent and require foreign exchange reserves to cover 4-6 months of imports.

The leaders endorsed those numbers but, as expected, did not set any targets for integration, which analysts said would have injected some badly needed momentum into the process.

The statement made no mention of the shape or location of a Gulf central bank or the drafting of legislation identified by a GCC source as being pressing issues that needed political resolution.

Finance ministers meeting in Jeddah in October said they needed more time to approve the methodology of monetary union.

The six leaders also endorsed a common policy for negotiating trade pacts, the subject of much controversy in the region.

The leaders endorsed a common trade policy for the GCC, while stressing the principle of group negotiation, the statement said.

It said the GCC was negotiating trade pacts with the European Union, China and Turkey.

The countries are negotiating separate trade agreements with the United States, after abandoning the notoriously slow GCC procedures for clinching collective deals.

Finance ministers managed to convince the UAE not to seal a bilateral trade pact with Australia only after agreeing to improve the GCC negotiating process. The summit had been expected to endorse this arrangement.—Reuters