The extent of the damage was revealed by Kuwait's foreign minister Sheikh Mohammed Sabah Al-Salem Al-Sabah, who is also acting oil minister. 'This just shows the huge damage caused by the crisis,' he told the Arab Economic Summit in Kuwait City.
The stark reality is that with oil prices having tumbled 75% from a July high as the global economy sank into recession, budgets are severely strained, he said.
'It's not in the interests of the global economy for oil prices to collapse or have huge increases. There should be stability to oil prices,' Sheikh Mohammed said.
Saudi Arabia, Oman and Dubai, the second-largest sheikdom in the United Arab Emirates, have said that they will run deficits next year as low prices squeeze revenue.
Also, sovereign wealth funds have been hurt by declining stocks. The New York based Council on Foreign Relations estimates a fund held by Abu Dhabi, the largest sheikdom in the UAE, lost $125 billion.
Gulf sovereign wealth funds have invested billions of dollars in financial institutions. The Kuwait Investment Authority last January paid $3 billion for a stake in Citigroup and invested $2 billion in Merrill Lynch. Abu Dhabi's Investment Authority bought a 4.9% stake in Citigroup for $7.5 billion in November 2007.
The crisis has meant that builders across the United Arab Emirates are struggling to finance developments and sell real estate as credit has dried up and a five year boom in property prices.
