And third, a giant step forward in our own framework of surveillance, peer pressure and policy adjustment within the monetary union. Speaking in the presence of Federal President Köhler, who played such a decisive role in creating monetary union and in the presence of the former Finance Minister Theo Waigel, the father of the Stability and Growth Pact, I must say that I count on the contribution of Germany with regard to the third step – the leap forward in policy surveillance and policy adjustment. Fiscal adjustment alone will not be sufficient to ensure sustainability. Structural reforms that will lead to more balanced growth are also vital to rebuild the resilience of our economies. The result must therefore be a renewal of the Stability and Growth Pact and the incorporation of a framework of surveillance for national policies of competitiveness. I hope that considerable energy will be devoted to this area in this country, so that a central outcome of the present demanding episode will be to strengthen the foundations of our monetary union. Conclusion Ladies and gentlemen, Europe has reacted with speed, energy and determination in the financial crisis. We have to stay on this path. We continue to need wise and sound, rapid and determined action by all countries. We need to resolutely improve the effectiveness of the peers’ surveillance of fiscal and economic policies. The weak points of past multilateral surveillance will be corrected, and the Stability and Growth Pact will be reinforced and rigorously applied in its letter and in its spirit.

Accordingly, you have instructed the various appropriate authorities and bodies to combat it and reduce its effects on the society, while maintaining the momentum of development achievements. The package of the various procedures, introduced by the government at the beginning of this year, is an appropriate preliminary step aimed at addressing inflation sources that directly affect the society segments who are less able to bear its impacts. As for the monetary policy, the Saudi Arabian Monetary Agency (SAMA) has taken steps to control excess domestic liquidity by increasing rates of reserve requirements many times. However, because of the dominance of the fiscal policy over the economy, the greater burden falls on reviewing spending priorities and its programming to be in harmony with the absorptive capacity of the national economy and its ambitious development objectives. It is hoped that these procedures, along with reviewing the expansion in government spending, will achieve the targeted goals, and inflation will resume its pace and stabilize at appropriate levels in the near future. Custodian of the Two Holy Mosques, The world is experiencing a crisis that threatens economic growth and financial stability in several major countries of the world. This crisis has prompted authorities in these countries not only to take unusual measures to protect their financial stability but also to review their supervisory and control regulations of the financial system, while economic policies are being affected by competitive goals, namely, maintaining economic growth, controlling inflation and maintaining financial stability.