Strict rules and regulations vital for financial institutions: expert

By Kaushalendra S Singh
MUSCAT — An international expert in economics and professor of economics at Georgetown University School of Foreign Service in Qatar, Ibrahim Mohammad Oweiss, gave a lecture on global financial crisis at the Oman Chamber of Commerce and Industry (OCCI) here. Hamoud bin Sangour al Zadjali, Executive President of the Central Bank of Oman, presided over the event. The lecture was organised under the joint auspices of OCCI and Sohar University. Addressing the distinguished gathering of business leaders, keen students of economics and members of the media, Ibrahim said the current economic crisis invaded the US and has affected the international market as well.

The global financial crisis has also affected GCC economies. The reason behind the crisis, he said, "is long drawn and inter-related as no single reason can cause such a big crisis in the market." He termed the crisis as a collapse of the US financial system. "This is the worst since great recession of 1929-30, " he said. Calling upon an intellectual co-operation to meet the situation, Ibrahim said the root cause behind the crisis was declaration of illegal war on Iraq. "There has been four-fold increase in American expenditure due to the war. This is an example of bad economic management.

The situation forced the Congress to decrease taxes while the expenditure was increasing. This led to increase in deficiency," he said. Commenting on the impacts of the crisis, Ibrahim said the rate of unemployment in the US has been 6.1 per cent per month now. "In September, 195,000 people lost their jobs. This is creating a bad cycle of lower income in the society and more and more pressure of bad loans on the banks and other financial sectors," he said. “Americans, he said, are spending the money, which is not theirs. Most of them are living on credits. They are using one credit card to take loan and the other to pay the loan.

The end result is the present financial crisis,” he said. Giving a note of advice in the present situation, Ibrahim suggested people not to get panic. "Buy and hold. Don't sell, buy stocks at lower prices and make your fortune,” he said He laid stress on strict rules and regulations for financial institutions and said that the central banks in every country should take lessons from the present crisis and ensure structured financial set up to avoid any such crisis in future.