A report by the finance, economy and industry committee was seen by Khaleej Times on Wednesday ahead of the council’s next session. It comes after a report on Wednesday that the GCC currency deadline had been postponed.
The Central Bank had earlier maintained that the peg to the dollarwould stay. The committee, chaired by Hamad Harris Al Madfa, made the recommendation based on a price hike and inflation which it attributed to the peg.
The ministry of economy said the dirham lost over 40 per cent of its value against the euro and other currencies in 2007 and this step would help guard against the impact of fluctuating currencies.
The recommendation to change to a basket of currencies was largely made based on the report’s findings on price trends. It recommended increases be checked and a select group of staple commodities, such as rice, wheat, flour, sugar, powdered milk, vegetable oil, drinking water and medicines, be subsidised.
According to GDP data that the Ministry of Economy released on Wednesday, the imputed inflation rate for 2008 was 18.6 per cent. This was significantly higher than the 11 per cent rate for 2007 and 9.1 per cent rate for 2006.
The committee also called for a time frame for the food security project which involves investing in other countries to secure commodities.
The report said legal and administrative barriers should be removed to allow the import of commodities and fight monopoly and alliances.
It detailed that consumer co-operative societies, which stand now at 15 with 34,000 shareholders, failed to create a real parallel market to the private sector.
Residents have also been hit by surging rents which the report found comprised 81 per cent of per capita spending in the country compared with 25 per cent internationally.
It called for reconsidering laws regulating the real estate market and demanded the government chalk out a federal legal and regulatory strategy on investment and real estate development to provide decent accommodation for all segments and meet commercial and industrial requirements.
A federal database for building materials, whether imported or made locally, was also recommended.
Building materials and food prices were affected by high fuel prices last year and the committee said fuel prices in the UAE were the highest among the Gulf countries. It was recommended that a review be conducted of the government pricing policy of fuel. The creation of a government body to fix the structure for local and federal government services was also suggested.
