"The booming Persian Gulf is starting to suffer from its own form of a credit and lending crisis.
As oil-fueled economic growth in the region surges, banks are finding that they don't have enough cash to meet all the demand from businesses to expand their operations.
The development means that unless banks are able to boost their deposits or develop new financial instruments, a lack of finance could provide an important brake on how quickly the region can grow....
"One of the big issues in the U.A.E. is the lack of financial instruments," says Mohsin Khan, the IMF's regional director for the Middle East and Central Asia. In particular, the fund is working to develop markets for "sukuk" bonds, a form of Islamic fund raising that can be traded without violating the Koran's prohibition on usury.
The value of sukuks issued rose to $47.10 billion in 2007 compared with about $25 billion in 2006 and $10 billion in 2005."...
Another factor adding to the crunch is the dollar's recent strength, which has driven away many foreign speculators who had bet the U.A.E. would cut its peg to the dollar, or revalue the local currency, the dirham."
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