GCC finance ministers and central bank governors have called an urgent meeting in Riyadh, Saudi Arabia, on Saturday to try to forge a more unified response to a global financial crisis that is buffeting the region more profoundly than many had anticipated, officials and analysts said today. For nearly a year, the turmoil in global credit markets has swirled around the Gulf without causing major reverberations in the GCC. While oil prices were soaring, the Gulf economies were able to maintain the sort of credit growth lacking nearly everywhere else in the world. In recent weeks, however, as the credit crunch has burst into a full-blown crisis the region has started to feel the repercussions. Many Gulf banks and even big-name corporations have found themselves shut out of international markets, while indebted companies have fretted over how to renegotiate billions of dollars worth of debt coming due this year and next. Today, the Ministry of Finance announced the terms of an emergency Dh25bn funding injection to be given to banks, the first part of a promised total Dh70bn. In a statement issued by the state news agency WAM, the ministry said the money should be used to bolster the national economy and not for speculative investments. Gulf countries have so far tended to act independently to protect their markets. However, analysts fear that a lack of regional co-operation could undermine the actions taken by individual countries. Earlier this week, the International Monetary Fund (IMF) used the announcing of its regional economic outlook to call for a more co-ordinated approach. "Obviously, they are going to be discussing the current financial situation and the financial crisis," said a spokesman from the central bank of Bahrain. "And the effects of it on the region." Although the agenda for the meeting has not been set, economists say it could serve as a way to ensure the governments present a more unified face against the crisis. Over the past two months, the UAE has taken several steps to shore up its financial system including offering to insure all local deposits and injecting as much as Dh120 billion (US$32.6bn) into local banks. Saudi Arabia has also insured deposits at its banks, while Kuwait and Qatar have used resources from their sovereign wealth funds to prop up embattled stock markets. Oman declared on Tuesday that it would delay plans to tighten its loan-to-deposit ratio requirement on banks until global markets settled. Robert Thursfield, a director of financial institutions at Fitch Ratings, said that if all other GCC countries did not move to insure deposits and interbank transactions, it could cause regional investors to move funds into areas with government-protected banking sectors, such as the UAE and Saudi Arabia. Although such an inflow of funds could help ease the credit shortage in the country, it might do so at the expense of the economies where the money came from, he said. GCC central bank governors and finance ministers met in Jeddah last month to discuss establishing a single currency for all GCC countries, excluding Oman. According to Daniel Kaye, an economist at the National Bank of Kuwait, the financial turmoil is likely to slow the process as it has made co-ordinating monetary policy more difficult in the region. So far the GCC has failed to decide on the terms of the monetary union, including the powers and location of a GCC central bank. European and US authorities have increased communication in recent weeks to make their emergency interest rate cuts and cash injections work in a co-ordinated manner. The three-month Emirates interbank offer rate (Eibor), which shows how much banks are charging each other for short-term loans, was the highest of all interbank rates in the GCC at 4.64 per cent on Wednesday. While other regional interbank rates have fallen significantly following government measures to relieve the shortage of credit, Eibor has continued to hover above 4.5 per cent, more than double its level in June. tpantin@thenational.ae