‘Don’t kiss your dollars goodbye as yet’ – IMF chief rejects calls for de-dollarisation

The International Monetary Fund chief has dismissed the possibility of the US dollar losing its status as the world’s dominant reserve currency.

The remark comes amid increasing talk about de-dollarisation, with some market participants even predicting the death of the greenback.

“The story of de-dollarisation has been with us for some time,” Kristalina Georgieva, managing director of the IMF, said at the Qatar Economic Forum yesterday.

“The US dollar’s share of global foreign exchange reserve has been going slightly down, it was 70 per cent of reserves earlier but now, it is slightly below 60 per cent of reserves,” she said.

“Nevertheless, we don’t expect a rapid shift in reserves. This is because the reason why the dollar is the reserve currency is due to the strength of the US economy and the depth of its capital markets.

“So, don’t kiss your dollars goodbye as yet.”

Ms Georgieva praised the GCC region as a remarkable example of determination to pursue reforms.

“There are some who think that the fortunes of the Gulf are oil and gas. In fact, the fortune of the Gulf is decisiveness in putting the economy on long-term, sustainable path.”

Ms Georgieva said she expected growth in the GCC to slow down at par with the global economic slowdown – to 2.9 per cent this year.

In the Middle East and North Africa, real gross domestic product grew by 5.3 per cent last year, reflecting strong domestic demand and a rebound in oil production.

However, growth is projected to decelerate this year to 3.1 per cent, before picking up slightly to 3.4 per cent in 2024.

“I also want to express the admiration for what has been for many years a recommendation from the IMF, that is being taken to heart, and it is [to] diversify,” said Ms Georgieva.

Saudi Arabia’s Finance Minister Mohammed Al Jadaan, meanwhile, described the GCC as a “very bright spot in today’s difficult world”.

“This did not come by chance but rather it came through rigorous execution of long-term co-ordinated plans to diversify,” Mr Al Jadaan told the forum yesterday.

What distinguishes this region from others is that it’s in the middle of trade routes connecting Asia with Africa and Europe, which gives it a competitive advantage, the Saudi minister said.