Jeddah– Under the patronage of the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud, the 46th Ordinary Session of the Council of Arab Central Banks and Monetary Authorities Governors and the Roundtable on “Central Bank Digital Currencies and the Future of the Monetary System”, hosted by the Kingdom, represented by the Central Bank of Saudi Arabia, kicked off here today, with the participation of several senior officials of the International Monetary Fund and the Financial Stability Board, along with experts from international institutions and global central banks.
In the opening session, Saudi Central Bank Governor Dr. Fahad Al-Mubarak delivered a speech in which he conveyed the greetings of the Custodian of the Two Holy Mosques King Salman bin Abdulaziz to the participants and stressed that the meeting corresponds to an important stage of economic development, reforms and development plans, in addition to the political turning points that the whole world is facing, and its repercussions on various economic, financial and monetary aspects, adding that these developments coincided with the post-Coronavirus (Covid-19) economic recovery, resulting from government’s efforts to address the pandemic through stimulus packages and direct support, which strengthened the economic recovery.
He added that today’s and tomorrow’s meetings will discuss important topics, including the repercussions of the global inflation wave, the risks of the repercussions of climate change on the financial sectors, and the challenges facing the banking sector in the wake of the lifting of support packages, noting that the high-level workshop will also discuss digital currencies of central banks.
Dr. Al-Mubarak stated that the Saudi economy continued to achieve high growth rates, as estimates for the second quarter of 2022 indicate a real GDP growth of 11.8% on an annual basis, and inflation levels in the Kingdom are still within acceptable rates, as the inflation rate recorded an annual of 3% in July of 2022, adding that the general unemployment rate concerning the labor sector continued to decline, reaching 6.0% during the first quarter of 2022, and the unemployment rate among Saudis also continued to drop reaching 10.1% in the first quarter of this year, achieving a remarkable improvement compared to 2020 when unemployment recorded 12.6%, as opposed to the global unemployment rate which also reached high rates due to the impact of the pandemic. Dr. Al-Mubarak said that this decrease is in line with the Kingdom’s plans to reduce the unemployment rate to 7% by 2030.
The Central Bank Governor concluded by thanking the Custodian of the Two Holy Mosques, HRH the Crown Prince, the Arab leaders for their support for joint Arab action, the Board of Governors, the Board of Executive Directors, and all workers for achieving the goals of their respective countries, wishing everyone success in pursuing the endeavor to achieve growth and progress for the peoples of our Arab nation, stressing that the Kingdom will always support the joint Arab action, and its contribution to the development of economic relations between Arab countries through regional development institutions.
Governor of the Tunisian Central Bank, President of the 46th session, Dr. Marwan Al-Abbasi, delivered a speech in which he expressed his sincere appreciation to Saudi Arabia for the generous hospitality and reception, adding “The uncertainty that the global economy is witnessing has resulted from the current global developments and the attendant challenges related to food security, rapidly rising prices of basic commodities, fluctuations in global supply chains, and the inflation rate. These developments prompted a reassessment of the situation of the global economy by reducing global economic growth forecasts for 2022, to about 3.2%, after it was relatively optimistic at the beginning of the year, as this downgrade in the forecast reflects the uncertainty of what the current developments may produce.”
Dr. Al-Abbasi underlined that the Arab countries are facing economic challenges that require making extensive efforts and moving towards adopting policies that help to meet the challenges in the short and medium term, at a time when they need to promote the desired economic growth and achieve levels of economic and social development that achieve the aspirations of peoples, adding that these challenges include expectations of higher inflation rates, increased debt rates in light of the rise in public debt levels in the wake of the Corona pandemic.
He noted that central banks play a pivotal role in consolidating opportunities for economic, financial, and monetary stability, coordinating policies to meet the current challenges, and enhancing the safety of the financial and banking sector in the medium and long terms.
Meanwhile, the Chairman of the Board of Directors of the Arab Monetary Fund, Dr. Abdulrahman bin Abdullah Al-Hamidy, thanked the Kingdom of Saudi Arabia, The King, the government, and the people for hosting this important Arab economic, financial, and banking forum, expressing sincere gratitude to the Custodian of the Two Holy Mosques and HRH the Crown Prince for their kind sponsorship of the meeting.
Dr. Al-Hamidy noted that expectations indicate that the global economy, per recent estimates by international financial institutions, will achieve a growth rate of about 3.2% in 2022 and 2.9% in 2023, after those estimates were relatively optimistic at the beginning of the year, amounting to about 3.5% and 4.4%, respectively, which reflects the state of uncertainty and what global developments will bring about and the possibility of the global economy entering a phase of so-called stagflation, given that fact that the latest estimates indicate a rise in the global inflation rate, to reach about 8.3% in 2022, and 5.7% in 2023 compared to an average of 3.2% and 4.7% in 2020 and 2021, respectively.
He pointed out that per the estimates of the Arab Monetary Fund, the growth rate of Arab economies is expected to achieve 5.4% in 2022, compared to 3.5% in 2021, driven by many factors, namely the relative improvement in global demand levels, and the growth of the oil and gas sectors, and Arab governments continuing to adopt stimulus packages to support economic recovery, while the pace of economic growth for Arab countries is expected to decline in 2023 to record about 4.0%, in line with the decline in the global economic growth rate, the expected decline in commodity prices, and the impact of the gradual withdrawal from expansionary fiscal and monetary policies that support the aggregate demand side.
Dr. Al-Hamidy noted the cooperation of Arab central banks and associations and unions of banks in Arab countries in reviving the activities of the Arab Day for Financial Inclusion, which took place on April 27, 2022, under the slogan “Importance of the Social Responsibility of Financial and Banking Institutions in Increasing Financial Inclusion”, and the pursuit of Arab central banks to develop frameworks which help to adopt and apply these standards by its financial and banking institutions and urges them to develop services and products that enhance social and environmental responsibility.
Source: Saudi Press Agency