A worker walks at the Gathering Center 15 (GC 15) oil facility 28 March 2005 in the northern Al-Rawdhatain oilfield, 80 Kms from Kuwait City. AFP PHOTO/YASSER AL-ZAYYAT
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Low oil prices are slowing or reversing deposit growth at Gulf Arab banks, but not enough to cause the liquidity squeeze that bankers fear.Deposits from governments, quasi-government bodies and national oil companies provide around 10 to 35 percent of banks' non-equity funding in the six-nation Gulf Cooperation Council, Moody's Investors Service estimates.GCC governments, which were obtaining around 90 percent of their income from oil exports, now have much less fresh money to deposit with banks, and may have to withdraw some to cover budget deficits.The impact of low oil prices can be seen in total deposits at Saudi commercial banks, which fell 2.0 percent month-on-month in January, the biggest drop in over a year.The big, wealthy Gulf governments have several ways to handle low oil prices without running down commercial bank deposits. One is using funds deposited at the central bank; the Qatar central bank's obligations to the government shrank 46 percent from a year earlier to 23.90 billion riyals ($6.57 billion) in January, their lowest level in two years.It may already have started doing so; net foreign assets at the Saudi central bank, which acts as the country's sovereign wealth fund, edged up just 1.2 percent from a year earlier to 2.725 trillion riyals in January.
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