Kuwait has called upon ministers of Arab countries to formulate a common policy to deal with the impact of the global crisis and limit its negative fallouts.

'We are required to search appropriate tools to stop the impact (of the crisis) on economic development in Arab countries and to realise the continuation of economic growth at an appropriate pace,' Kuwait finance minister Mustafa Al-Shamali told a meeting of Arab central bankers and finance ministers in Kuwait on Wednesday.
 
Ministers of the 22-member Arab League met in Kuwait to discuss ways of coping with a global financial crisis and the collapse in oil prices.

'(The meeting) is about finding ways to stop the fallout of the crisis,' Al-Shamali said.

Shamali said Arab countries have been affected by the economic crisis, especially due to a sharp decline in the price of oil, the main source of income for several Arab countries, and as foreign investments dropped.

Oil prices have slumped to below $40 a barrel, virtually a quarter of the record peak above $147 they hit last July, because of a downturn in global energy demand.

The global financial crisis, the worst since the 1930s, has pushed much of the industrialised world into recession, and also dimmed the economic outlook for the Arab world.

EFG-Hermes said this week it expected Saudi Arabia's economy to contract 0.9 percent this year on sharp crude production cuts, while Standard Chartered Bank last week slashed its UAE growth forecast to 0.5 percent.

Egypt has set an economic growth target of 5.5 percent for the two years starting July 2008, down from 7.2 percent in the 2007-08 fiscal year, saying it expected exports, foreign investments, tourism and Suez Canal receipts to get hit by the global downturn.

'For each dollar the oil price declines, Arab oil revenues fall between $4 and $10 billion annually,' Organization of Arab Petroleum Exporting Countries (OAPEC) said in a briefing report for discussion by policymakers on Wednesday.

'This means rising pressure on governments' budgets and the reduction of expenditures and average growth rates.'

Saudi Arabia, Oman and Dubai are already projecting budget deficits this year after recording bumper surpluses during a six-year oil-fuelled economic boom, he added.