Saudi Arabia’s central bank governor, Muhammad al-Jasser, said European measures to halt the region’s sovereign debt crisis will restore confidence.
The European crisis proves that monetary and fiscal policies are linked, al-Jasser said in an interview with Al Arabiya television that was aired today. He said he was “less worried” about Europe now than he was last week, and that the Gulf states are learning from what is happening there.
European banks should be supported, al-Jasser said at a conference yesterday in Kuwait. He said last week’s European debt agreement sends an important message to markets.
European leaders agreed to increase the region’s rescue fund to 1 trillion euros ($1.4 trillion) and persuaded bondholders to take 50 percent losses on Greek debt, responding to pressure to come up with a credible plan before next week’s Group of 20 meeting in France. Late yesterday, Greek Prime Minister George Papandreou called for a referendum on the agreement, raising the prospect of derailing the bailout effort and pushing Greece into default. Stocks and the euro tumbled.
Saudi Arabia and other Gulf nations are benefiting from oil prices averaging above $94 a barrel this year and government spending. The economies of oil exporters are set to expand by 4.9 percent this year from 4.5 percent last year, according to the International Monetary Fund.
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