Qatar Central Bank Governor HE Sheikh Abdullah bin Saud al-Thani is optimistic that a solution to the US debt crisis can be agreed within a week, he was quoted as saying yesterday.
Qatar and other Gulf Arab states are major holders of US Treasuries and Sheikh Abdullah was quoted by Doha-based Arabic newspaper as saying Washington would be able to find a solution to the financial dilemma within the next seven days.
The US edged closer to a devastating default as Republicans and Democrats were deadlocked over competing plans to raise the debt ceiling, one week before an August. 2 deadline to act.
If no agreement regarding the debt ceiling is reached by the deadline, it will have negative fallout on the global economy but Qatar will be shielded from these repercussions, Sheikh Abdullah told the paper.
The Qatari economy is resilient and immune to crises and it’s the world’s fastest growing economy, he said, according to the daily.
He added that the country’s economy was expected to grow 18% this year according to the International Monetary Fund.
Other central bank officials in Saudi Arabia, the United Arab Emirates and Kuwait were not immediately available for comment on their views on the US debt crisis. Bahrain’s central bank declined to comment.
An official at Oman’s central bank said in June the bank had started to actively discuss a potential US debt default and feared such a move would, at least briefly, de-stabilise Gulf Arab foreign asset reserves.
Opec member Qatar held foreign reserves worth QR70.5bn ($19.4bn) at the end of May, down 13.7% from QR79.4bn at the end of April, latest central bank data showed.
Gulf states mostly peg their currencies to the US dollar and their main source of revenue, oil, is priced in dollars but they do not usually disclose the composition of their foreign currency reserves.
“I would assume there would be no major shift in reserves in the Gulf at this time,” said Giyas Gokkent, chief economist at the National Bank of Abu Dhabi.
“It simply cannot be the case that suddenly central banks start switching and move to other currencies as reserves. The question is, even if you want to switch, what do you switch to?”
The newspaper also quoted Sheikh Abdullah as saying that inflation in Qatar was under control. Annual inflation edged up to 1.7% in May. Analysts polled by Reuters in June forecast inflation in the world’s top liquefied natural gas exporter would reach 3.2% this year.